Founders should first assemble a team of trusted partners to guide them through the process, including but not limited to a wealth advisor, estate planner, corporate attorney, investment and private bankers, and an accountant. After that, they should review how their ownership stakes are held, and evaluate the potential value of shares.
Establishing or reviewing an estate plan is crucial for defining long-term objectives, which will help when setting plans to reach those targets. Trusts like the Dynasty or Grantor Retained Annuity Trusts (GRAT) are common go-to picks for this stage, as they allow a founder to pass wealth to the future generation in a tax-efficient way – depending on the time horizon, that is. An estate plan may also include other elements like a basic will, outright gifts, life insurance, living trusts, and a power of attorney.
Once that’s sorted, an expert team can get down to work formulating a plan to diversify the founder’s assets. That’ll largely depend on personal attitudes such as market expectations, risk tolerance, investment goals, and constraints, to name a few.