Thursday, May 26, 2011

Ensure Your Legacy with a Family Foundation

Faced with the prospect of being constantly bored and moping around the house endlessly with so much time on his hands, the retiring head of the family business instead resists his retirement. Or, if he has already retired, he decides to “un-retire” and regain his old position in the company. Both scenarios can upset any well-laid family succession plans and provoke heated emotions.
But there’s a valuable instrument that can overcome these fears and provide a channel for the retiring family member to continue to contribute to society. That’s the family foundation. In this instance, a family foundation refers to a non-profit, non-government foundation, usually in a family member’s name, that is devoted to doing civic or charity work within the community.
Take the case of Andrew Jordan, who founded of a convenience store chain in Seattle 30 years ago. For the last three years since Andrew retired, his son, Eric, has been at the helm of the family business and has ushered in a period of great success. Meanwhile, Andrew and his wife Emily, who are both in their seventies and in excellent health, continue to lead active lives. A few months ago, Andrew got tired of traveling, fishing and playing golf. He has also spent so much time puttering around the house that he has run out of things to do.
After speaking with Emily, Andrew decided that it was a good idea to return to the family business. Otherwise, he was afraid that he would lose his mind out of sheer boredom. Andrew felt it was an excellent idea, but his son Eric was not exactly jumping for joy. Eric felt he had done a good job running the family business, which indeed he had, and that it was simply was unfair for his father to get back the chairman’s seat. There were no heated words exchanged but Eric was clearly disappointed and his father naturally concerned.
Andrew called a family meeting with Eric, his three younger brothers and other family members who also held positions in the family business. After several days of discussions, the family understood that Andrew and Emily needed an outlet for their creative energy. The family was deadlocked about what to do and Andrew did not budge from his desire to return to his old position.
The next day, one of the younger sons had a suggestion: why not set up a family foundation to help families in Seattle to deal with leukemia. Andrew and Emily had lost their youngest son to this disease so the foundation stood for a cause that was close to their hearts. The pain of losing a son was still etched in Andrew’s heart. He felt it would be a labor of love to help other families cope with the same problem. He and Emily could dedicate the foundation’s efforts to their late son.
In an instant, Andrew knew the foundation was a good idea. His attorneys and accountants loved the idea as well, especially since it meant some significant tax savings and would jump-start the estate planning process. It was a go.
Once the foundation had been set, Andrew and Emily had another pleasant surprise. This new endeavor had rekindled their deep love for one another and had brought back the sense of excitement and challenge that they had felt when they were starting the family business. The foundation added new meaning to their relationship.
Moreover, their son Eric also loved the leukemia foundation, not only because it helped him retain his position in the family business, but also because he knew that, when it was his turn to retire, he had a place to go to.
The lesson is that, unless a retiring family member has something worthwhile to move to, he may resist his retirement and refuse to leave the family business. In this instance, it is clearly not the title or the sense of authority that the retiring family member wants to cling to. He simply wants a place he can be passionate about, a place that gives him a strong sense of accomplishment.
In the final analysis, the goal of the family foundation is to provide the retiring family member with the same things the family business provided: a venue for his creative energy where he can have an impact on the lives of others.
No one wants to retire and lose the thing that defines him in the family and in the community. Who truly wants to retire and have nothing to do but twiddle his fingers and watch time go by? Having a family foundation solves both these problems. It also provides a lasting legacy for future generations of the family.

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