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Strategic wealth management for
entrepreneurs and business owners
Volume 6 | Post-exit considerations
Wealth and Investment Management
What are some of the considerations that an entrepreneur should
bear in mind when establishing a post-exit advisory team? pg. 6
How does Barclays’ approach to wealth management apply
to business owners and entrepreneurs? pg. 10
What are some of the primary attributes of an
entrepreneur’s balance sheet as they relate to
the “post-exit phase” of a company’s strategic
life cycle? pg. 13
How can philanthropy serve as an integral component
of post-exit wealth management planning? pg. 18
What are some of the common planning pitfalls that a
post-exit entrepreneur should be wary of? pg. 21
How can the results of the Barclays Financial Personality
Assessment™ assist post-exit entrepreneurs who establish
trust vehicles to structure their wealth? pg. 28
What are the key “next steps” that a post-exit entrepreneur
should consider at this juncture? pg. 34
Contents
Introduction..................................................................................................................... 2
About this volume.......................................................................................................... 4
Step 1: Select a post-exit advisory team................................................................... 5
Key questions to consider when assembling a post-exit advisory team....................................... 6
Step 2: Adopt a structured approach to wealth management............................. 9
Key questions to consider when adopting a structured approach to wealth management......... 10
Step 3: Understand your wealth................................................................................ 11
Key questions to consider..................................................................................................................... 12
Step 4: Organize your wealth..................................................................................... 14
Key questions to consider..................................................................................................................... 15
Step 5: Understand your risk tolerance................................................................... 24
Key questions to consider.....................................................................................................................25
Step 6: Understand your financial personality....................................................... 27
Key questions to consider.....................................................................................................................28
Step 7: Invest your wealth .........................................................................................30
Key questions to consider.....................................................................................................................31
Step 8: Consider “next steps”.................................................................................... 33
Key questions to contemplate when evaluating “next steps”........................................................34
Conclusion.....................................................................................................................36
“Entrepreneurship is living a few years
of your life like most people won’t, so
that you can spend the rest of your
life living like most people can’t …”
Anonymous
“Entrepreneurship is living a few years of your life like most people won’t, so that you can spend
the rest of your life living like most people can’t …” – Anonymous
Perspective – one journey completed … another journey begun
For the vast majority of business owners, the “post-exit” phase of their company’s strategic
life cycle represents the culmination of many years of personal sacrifice, intellectual resolve
and emotional fortitude.1
Ironically, however, having scaled the summit of entrepreneurial success, many of these individuals
subsequently find themselves confronted with a novel (and, for some, disquieting) chapter of their
wealth management journey – the transition from “entrepreneur” to “investor”.
Challenge and opportunity – a differentiated proposition
This publication – Strategic wealth management for entrepreneurs and business owners (Volume 6:
Post-Exit considerations) – provides former business owners with the insight to help craft a tailored
wealth management plan that responds to their unique needs and goals.
By doing so, we hope that those individuals who once dedicated their passion and energy to the
establishment of a thriving business can redirect their focus toward the strategic investment of the
wealth derived from its disposition.
Holistic wealth management – the Barclays approach
At Barclays, we seek to ensure that entrepreneurs can fulfill their aspirations – investment-focused
or otherwise – in a manner that is thoughtful, creative and balanced. Ultimately, we acknowledge the
effort that you – our clients – have made in creating your wealth.
We seek to work alongside you and your families to preserve and help grow that wealth.
Christopher Johnson
Head of Wealth Advisory and Strategic Solutions, Americas
1. Despite the fact that much of this struggle may stem from the challenges associated with failure, entrepreneurs
seem almost uniquely adept at overcoming such obstacles and reformulating their setbacks into catalysts for
eventual success. Many of these individuals seem to feel as Truman Capote did when he observed that, “Failure
is the condiment that gives success its flavor.” For additional insights into entrepreneurs and their mindset in this
regard, refer to the Barclays publication entitled, Wealth Insights – If at First You Don’t Succeed…Mapping Global
Attitudes to Adversity.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 2
Six-volume series: Strategic wealth
management for entrepreneurs and
business owners
Strategic wealth management for
entrepreneurs and business owners
Strategic wealth management for
entrepreneurs and business owners
Strategic wealth management for
entrepreneurs and business owners
Volume 1 | Forming a business
Volume 2 | Growing a business
Volume 3 | Transitioning the business
to family members
Wealth and Investment Management
Wealth and Investment Management
Wealth and Investment Management
Strategic wealth management for
entrepreneurs and business owners
Strategic wealth management for
entrepreneurs and business owners
Strategic wealth management for
entrepreneurs and business owners
Volume 4 | Pre-IPO planning
Volume 5 | Pre-Sale planning
Volume 6 | Post-Exit considerations
Wealth and Investment Management
Wealth and Investment Management
Wealth and Investment Management
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
3
About this volume
The “post-exit” phase of business ownership is defined as the point in time immediately following an
entrepreneur’s disposition of his or her company.
In most instances, this exit will occur by one of three methods, including:
>> A transfer of the business to family members2
>> An Initial Public Offering3
>> A sale of the company4
Figure 1: Strategic life cycle of business ownership
What do I need to
consider as I form
my business?
What do I need to
consider as I grow
my business?
VOLUME 1
VOLUME 2
Formation phase
Growth phase
What do I need to consider
as I transition my business?
VOLUME 3
What do I need to
consider after exiting
my business?
Transitioning to
family members
VOLUME 6
Post-Exit
considerations
or
VOLUME 4
Pre-IPO planning
or
VOLUME 5
Pre-Sale planning
From a wealth management perspective, the post-exit phase provides former business owners with
the opportunity to review their existing wealth management methodologies, realign their tax, trust
and estate plans, and rebalance their investment portfolios in order to more accurately reflect their
current circumstances.
In order to accomplish these tasks, entrepreneurs should systematically seek to:
>> Assemble
a post-exit
advisory
team
>> Adopt a
>> Understand
structured
approach
to wealth
management
their wealth
>> Organize
their wealth
>> Understand
their risk
tolerance
>> Understand
their
financial
personality
>> Invest their
wealth
Each of these will be addressed in turn.
2. For additional details regarding this phase of a company’s life cycle, refer to Strategic wealth management for entrepreneurs and business
owners (Volume 3: Transitioning the business to family members).
3. For additional details regarding this phase of a company’s life cycle, refer to Strategic wealth management for entrepreneurs and business
owners (Volume 4: Pre-IPO planning).
4. For additional details regarding this phase of a company’s life cycle, refer to Strategic wealth management for entrepreneurs and business
owners (Volume 5: Pre-Sale planning).
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 4
Step 1
Select a post-exit
advisory team
5
Q:
What is a post-exit advisory team?
A post-exit advisory team is an assortment of advisors whose professional acumen will
provide former business owners with the breadth of expertise required to envision, establish
and maintain their post-exit wealth management plans.
Q:
What are some of the considerations that an
entrepreneur should bear in mind when establishing a
post-exit advisory team?
In some instances, an entrepreneur will have worked with a group of advisors over the course
of months or years as the business has matured. Following the disposition of the business, it
is essential that an open dialogue exists to address the fact that new advisors may need to be
added to the team as the situation warrants. In this regard, headwinds can arise when advisors
lack the necessary expertise to undertake planning in a particular area but are reluctant (or
unaware of the need) to seek the assistance of other experts.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 6
At this point in time, entrepreneurs will have divested themselves of their (primary)
commercial ventures and will normally have begun to shift their focus to issues
concerning personal planning and investment management. This reprioritization
will be reflected in the changing composition of their advisory teams.
In this regard, the following professionals will normally serve as key consultants:
The Certified Public Accountant (“CPA”)
The Trust & Estate Attorney (“T&E Attorney”)
The post-exit phase of a business owner’s relationship with
At this juncture, Trust & Estate Attorneys are tasked
his or her CPA is normally characterized by a reorientation
with revisiting, reviewing and redrafting those aspects
in focus – one that shifts away from the compliance,
of a client’s estate plan that require attention following
bookkeeping and financial supervision of a company’s
the disposition of the company. In the event that a T&E
well-being and toward the financial oversight of the former
Attorney was engaged early-on during the life cycle of the
owner’s current wealth management structure (assuming
business, significant income, estate and gift tax savings
that the existing accountant is suited to those tasks).
may already have been realized. However, even if this is not
the case, there will normally still be several mechanisms
The Corporate Trustee
by which a client can effectively plan for the orderly and
In many instances, the utilization of a Corporate Trustee
efficient disposition of his or her estate.
will provide the benefits normally afforded by trust
structures (e.g., tax minimization, estate planning, creditor
The Trustee
protection) in addition to those specifically attributable
Trustees are those individuals who oversee property held in
to a Corporate Trustee (e.g., objectivity, continuity and
trust for the well-being of beneficiaries (e.g., the family and
professional oversight).
children of a former entrepreneur).
The Insurance Agents
The Wealth Advisor
A former business owner will normally require a broad range
Ideally, the credentials of a Wealth Advisor will include an
of insurance coverage (although the nature and the amount
attorney with extensive professional experience within the
of the coverage may vary from what was in effect during
realms of tax, trust and estate planning. His or her role is
the existence of the business). Insurance Agents can
to facilitate the organization of a client’s wealth – thereby
provide valuable guidance in this regard.
helping to ensure that an individual’s asset allocation derives
logically from his or her asset location (i.e., the various entities
The Investment Representative (“IR”)
and other structures within which wealth is held).
Investment Representatives work with clients in order to
assist them in understanding, organizing and – ultimately
– investing their wealth. During the post-exit phase of
entrepreneurialism, Investment Representatives ascend to
a vital role within the hierarchy of service providers – that of
a “trusted advisor”.
Neither Barclays or its affiliated companies sell or solicit insurance. You should consult with your licensed insurance agent for further
information on insurance products or services.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
7
Figure 2: Business owners should leverage a core advisory team to resolve key business issues
Engage in
philanthropy
Trust & Estate
Attorney
Corporate
Trustee
Adopt a
structured
approach
to wealth
management
Trustee
Develop a
tailored
investment
portfolio
Post-exit phase
business owner
Wealth
Advisor
Investment
Representative
Accountant
Insurance
Agents
Optimize your
insurance
coverage
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 8
Step 2
Adopt a structured approach
to wealth management
9
Having assembled a post-exit advisory team in order to provide
key professional services, an individual must subsequently seek
to adopt a wealth management methodology that facilitates the
creation of a tailored investment plan.
Figure 3: Our unique approach to managing your wealth
Understanding your wealth
Organizing your wealth
Understanding your risk tolerance
Understanding your financial personality
Investing your wealth
Consult with your Investment Representative: For additional information regarding
Barclays’ approach to holistic wealth management, request a copy of the publication
Managing Your Wealth with Barclays.
Q:
How does Barclays’ approach to wealth management
apply to business owners and entrepreneurs?
Although Barclays’ wealth management methodology may be suitable for all individuals (i.e.,
regardless of entrepreneurial disposition), there are particular attributes of the approach that are
especially relevant for entrepreneurs.
These characteristics are discussed in the following sections of this document.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 10
Step 3
Understand your wealth
11
Q:
How does the concept of “understanding your wealth”
find unique application to entrepreneurs?
The concept of “understanding your wealth” serves as a tacit acknowledgment of the fact that
an individual’s wealth consists of more than merely his or her investment portfolio. Indeed, as it
encompasses the sum of one’s assets (and liabilities), a holistic approach to wealth management
will only be relevant if it articulates how best to align a client’s goals with his or her personal
holdings, investment portfolio, and business investments.
As illustrated in the figure below, an entrepreneur’s understanding of his or her wealth will also
evolve over time in order to reflect the individual’s passage through three key phases of optimal
wealth alignment.
These phases consist of:
>> The establishment phase
>> The growth phase
>> The post-exit phase
Figure 4: Elements of a business owner’s balance sheet over time
Establishment phase
Growth phase
NPV of
entrepreneurial
acumen
NPV of
entrepreneurial
acumen
Personal
holdings
Investment Business and
portfolio
opportunistic
investment
Post-exit phase
Personal
holdings
Investment Business and
portfolio
opportunistic
investment
Personal
holdings
Investment Business and
portfolio
opportunistic
investment
For illustrative purposes only.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 12
Q:
What are the primary attributes of an entrepreneur’s
balance sheet as they relate to the “establishment phase”
of a company’s strategic life cycle?
In the first phase (i.e., the establishment phase) of entrepreneurial wealth alignment, the business
emerges from its nascent, formative stages of growth. At this point in time, the entrepreneur’s
balance sheet may consist of relatively meager personal and investment holdings (as individual assets
may have been largely reallocated to fund the launch of the business venture).
What is important to acknowledge at this juncture in the company’s strategic life cycle is that business
and opportunistic investments – while arguably modest from a tangible perspective – represent a vast
reservoir of potential wealth that may be realized as the business matures and gains traction.5
Consult with your Investment Representative: For additional details regarding this period
of the company’s life cycle please refer to the first volume in this series: Strategic wealth
management for entrepreneurs and business owners (Volume 1: Forming a business).
Q:
What are the primary attributes of an entrepreneur’s
balance sheet as they relate to the “growth phase” of a
company’s strategic life cycle?
During the second phase (i.e., the growth phase) of the business, the fluidity of the entrepreneur’s
balance sheet begins to manifest itself as the company embarks upon its growth trajectory and becomes
profitable. Although the upper limits of the venture’s long-term success remain unclear at this time,
a portion of the company’s “potential success” is harnessed and manifests itself as tangible success.
In tandem with this accomplishment, the entrepreneur’s personal holdings and investment
portfolio may also display growth (although not always at the same pace as his or her business and
opportunistic investments).
Consult with your Investment Representative: For additional details regarding this period
of the company’s life cycle, please refer to the second volume in this series – Strategic wealth
management for entrepreneurs and business owners (Volume 2: Growing a business).
Q:
What are the primary attributes of an entrepreneur’s
balance sheet as they relate to the “post-exit phase” of a
company’s strategic life cycle?
Following a divestment of the business (either by transfer to family members, IPO, or sale), the
elements of an entrepreneur’s balance sheet again shift. This latter phase of the life cycle is often
characterized by diminished business and opportunistic investments (as the business venture
is no longer a component of the entrepreneur’s balance sheet). Rather, the monetization of the
entrepreneurial endeavor is now complete.
Generally, the bulk of the resultant wealth is redeployed to a tailored investment portfolio – one which
is designed to respond to the unique needs, goals and aspirations of the entrepreneur in question.
5. See, Strategic wealth management for entrepreneurs and business owners (Volume 5: Pre-Sale planning).
13
Step 4
Organize your wealth
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 14
Figure 5: Building a comprehensive plan adds value at all stages of a business’ development
What planning
techniques should I
consider as I grow my
business?
What planning
techniques should I
consider as I transfer
or exit my business?
What planning
techniques should I
consider after I exit
my business?
Value of business
What planning
techniques should I
consider as I form
my business?
Time
Q:
How does the concept of “organizing your wealth”
find unique application to entrepreneurs?
Organizing your wealth – in Barclays parlance – broadly refers to the requirement that one embark
upon thoughtful tax, trust and estate planning prior to finalizing an investment portfolio. As such, it
is generally most effective when it is opportunistically positioned to align with an individual’s evolving
wealth profile.
Because entrepreneurs will generally follow specific paths toward the establishment, growth and
exit of their business endeavors, anticipatory planning of this nature can be of immense value to a
business owner regardless of where they are in the life cycle of their company.
In the case of individuals who are in the post-exit phase of entrepreneurship, their resultant wealth
profile will normally dictate that much of the planning undertaken at this time be focused upon how
best to structure and convey wealth in a tax-efficient manner.
Q:
How conducive is the current tax landscape toward estate
and gift planning?
The current legislative environment is extremely conducive to sophisticated estate and gift planning.
The exemption amounts for federal estate tax, gift tax and generation skipping tax (“GST”) are high
and corresponding tax rates are (by historical measures) relatively low.
15
The chart below summarizes the current and historical federal estate, GST, and gift tax exemptions.
Figure 6: Historical estate, GST, and gift exemption values and rates
Calendar
year
Estate tax
exemption
GST tax
exemption
Gift tax
exemption
Top estate, GST, and
gift tax rates
2003
$1 million
$1.12 million
$1 million
49%
2004
$1.5 million
$1.5 million
$1 million
48%
2005
$1.5 million
$1.5 million
$1 million
47%
2006
$2 million
$2 million
$1 million
46%
2007 and 2008
$2 million
$2 million
$1 million
45%
2009
$3.5 million
$3.5 million
$1 million
45%
2010
(taxes repealed)
(taxes repealed)
$1 million
35% (gift tax)
2011
$5 million
$5 million
$5 million
35%
2012
$5.12 million
$5.12 million
$5.12 million
35%
2013
$5.25 million
$5.25 million
$5.25 million
40%
2014*
$5.34 million
$5.34 million
$5.34 million
40%
*Exemption figures will be inflation-adjusted in subsequent years.
Source Data: Internal Revenue Service (IRS) as of April 2014.
Q:
How does the tax and estate planning normally undertaken
by a post-exit entrepreneur compare with a business owner
who has yet to divest his or her business?
As noted in Step 3 of this analysis (i.e., Understanding your wealth), the composition of an
entrepreneur’s balance sheet will undergo significant modification as he or she passes through the
three key phases of his or her company’s life cycle:
>> The establishment phase of the company
>> The growth phase of the company
>> The post-exit phase of the company
During the establishment and growth phases of the company, much of the planning that will be
undertaken will seek to capture and convey the “uptick” in value of the business venture as it matures.
Vehicles that effectively serve this purpose include:
>> Grantor Retained Annuity Trusts (“GRATs”)*
>> Intentionally Defective Grantor Trusts (“IDGTs”)*
>> Family Limited Partnerships (“FLPs”)
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
* Some important considerations for trusts exist. Trusts have inherent limitations and requirements that must be acknowledged/fulfilled in
order for these structures to accomplish their purposes. Trusts are not suitable for all business owners. For additional details about these
considerations please reference the back page of this document.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 16
Conversely, during the post-exit phase of wealth management, much of the potential for rapid
appreciation of wealth has dissipated (at least insofar as it relates to business investments).
As a result, much of the structuring that takes place does so in an effort to:
>> Reduce income, estate and gift taxes
>> Enhance creditor protection
>> Provide control and oversight for wealth that has been conveyed to children and family members
>> Engage in philanthropic planning
>> Strategically align trust and estate planning to broader wealth management goals
Vehicles that serve as efficient mechanisms for helping to achieve these goals include:
>> Trusts
>> Private Foundations
>> Donor Advised Funds (“DAFs”)
>> Charitable Lead Trusts (“CLTs”)
>> Charitable Remainder Trusts (“CRTs”)
Consult with your Wealth Advisor and your Investment Representative: A Wealth Advisor
can outline the range of planning options suitable for a post-exit business owner and can
then work with other members of the advisory team to help facilitate the effective integration
of the broader wealth management strategies.
Q:
What are the components of a trust and what are its
primary benefits?
Some of the benefits of a trust are highlighted below.
Figure 7: Potential benefits of a trust structure
Grantor
Trust
Beneficiary
The individual who sets up the
trust structure and contributes
assets to the trust.
Benefits of a trust include:
Estate tax minimization; Flexibility
to benefit multiple generations
and/or charities; Creditor protection;
Probate avoidance.
The recipient (or recipients)
of the trust assets.
Consult with your Wealth Advisor: Your Wealth Advisor, together with your other advisors, can
discuss with you whether or not a trust may be an appropriate solution for you in the context of
your broader wealth plan.
For illustrative purposes only.
17
Q:
How can philanthropy serve as an integral component of
post-exit wealth management planning?
For those individuals who are charitably inclined, philanthropic vehicles can serve as an ideal means to
further their philanthropic desires while simultaneously minimizing their income tax bill.
The chart below compares the salient aspects of five key approaches to charitable giving:
>> Private Foundations
>> Donor Advised Funds (“DAFs”)
>> Charitable Lead Trusts (“CLTs”)
>> Charitable Remainder Trusts (“CRTs”)
>> Outright stock or cash donations
Figure 8: Philanthropic comparison chart
What charitable
vehicle should
you consider?
Should you
establish
a Private
Foundation?
Should you
contribute to
a DAF?
Should you
establish a CLT
or CRT?
Should you
make an
outright
stock or cash
donation?
Charitable
distribution
discretion
Income tax
deduction
Privacy
Investment
discretion
Multiple
There are extensive
administrative duties
due to ongoing
reporting requirements
and tax filings
Limited
Detailed information
must be filed by the
foundation for all
donations/grants, etc.
Retained
The foundation’s
board and investment
managers control all
investment decisions
Retained
The foundation
maintains discretion
over charitable
distributions (there
is a minimum 5%
annual distribution
requirement)
Yes
A donor benefits
from a tax deduction;
however, several
limitations exist
Few
There are no
significant ongoing
administrative duties
Significant
The DAF can keep all
donor information
anonymous, if desired
Partially retained
The donor can make
recommendations;
however, the fund
may have finite
investment options
Partially retained
While not required,
the DAF administrator
generally honors donor
recommendations
Yes
A donor benefits from
a tax deduction and
few limitations exist
Multiple
There are some
administrative
duties required of
the trustee (e.g.,
tax filings and cash
distributions)
Significant
Setting up a trust
can be an effective
means of maintaining
donor privacy when
contributing to a charity
Retained
The trustee controls all
investment decisions.
The donor can
influence the trustee
Retained
When setting up
a charitable trust,
charities are
selected that will
ultimately benefit
from trust assets
Yes
A donor benefits
from a tax deduction;
however, several
limitations exist
Few
There are no ongoing
administrative duties
for the donor
Significant
Allows for privacy;
however, some
information is
normally captured
on a tax return
Lost
Once the donor
makes the charitable
gift, the donor loses
control of the assets
– future investment
control rests with
the charity
Lost
The charity decides
how to expend
donated funds
Yes
A donor benefits from
a tax deduction and
few limitations exist
Administrative
duties
Consult with your Wealth Advisor: Your Wealth Advisor can discuss with you how best to
approach the question of determining a suitable philanthropic gifting strategy.
The following sections explore each of these philanthropic approaches in greater detail.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 18
Q:
What is a private foundation and what are its most
appealing characteristics from the perspective of
post-exit entrepreneurs?
Private Foundations,* as highlighted below, are vehicles that receive, hold and distribute a donor’s
contributions in and from an entity that affords its creator a great deal of control, oversight and
flexiblity. They are also popular with those high net worth individuals who seek to involve their family
members (often their children) in philanthropic causes, as they permit such individuals to serve on the
Private Foundation’s advisory board (in a paid or unpaid position). Their primary drawbacks include the
fact that they are generally not cost effective for moderate wealth profiles, as well as the fact that they
tend to be expensive to establish and maintain (due to high compliance and administrative costs).
Figure 9: Use of a Private Foundation
Donor
Private Foundation
Charity
The donor contributes
cash or low-basis assets to
the foundation.
The foundation makes
annual distributions to further
its charitable purposes.
Charitable distributions
are made to one or more
charitable causes.
Q:
What is a Donor Advised Fund and what can make it an
appealing philanthropic option for post-exit entrepreneurs?
Donor Advised Funds (“DAFs”),* as noted in the accompanying illustration, are charitable entities that
allow for low-cost and flexible philanthropic giving. They serve as a common alternative for those
individuals who wish to avoid the expense and complexity of establishing a private foundation.
Figure 10: Use of a Donor Advised Fund
Donor
Donor Advised Fund
(DAF)
Charity
The donor contributes
cash or low-basis assets
to the DAF.
The donor receives an income
tax deduction upon contribution
to the DAF.
Charitable distributions are made
by the DAF to one or more
charitable entities.
Visuals on this page are for illustrative purposes only.
*Some important considerations for charitable structuring exist. Private Foundations and DAFs have inherent limitations and requirements
that must be acknowledged/fulfilled in order for these structures to accomplish their purposes. They are not suitable for all business
owners. For more details about these considerations, please reference the back page of this document.
19
Consult with your Wealth Advisor and your Investment Representative: DAFs can be utilized
by entrepreneurs who are time constrained and who need to complete their charitable giving
with short notice (e.g., prior to the end of a tax year). In instances where there is insufficient
lead time to establish an alternative philanthropic vehicle, your Wealth Advisor and your
Investment Representative will be able to provide you with an introduction to a suitable DAF.
Q:
What is a Charitable Remainder Trust and what can make it an
appealing philanthropic option for post-exit entrepreneurs?
Charitable Remainder Trusts (“CRTs”)* allow donors to benefit from charitable giving as well as taxdeferred diversification. In practice, a CRT will pay an annual distribution to a specified beneficiary
(often the donor) for a period of time. At the end of the trust term, any assets remaining in the trust
will accrue to a named charity (or a charity to be selected).
When the CRT is established, the donor will receive a charitable deduction equal to the present value
of the charity’s expected remainder interest. Potential income earned by the CRT will remain untaxed
until it is distributed to the current beneficiary.
By virtue of its structure, a CRT allows donors to diversify their portfolio through the sale of shares
by the CRT, to defer the resultant tax until receipt of the payments by the individual beneficiary, and
to compound their investment returns by investing the pre-sale value of the stock rather than the
after-tax value.
Figure 11: Use of a Charitable Remainder Trust
Donor
Charitable Remainder Trust
(CRT)
The donor contributes assets
(often highly appreciated stock)
at no gift or capital gains tax cost,
and may receive an income
tax deduction.
The CRT pays a fixed dollar amount
(or fixed percentage) back to the
donor, which is generally taxable
income for the donor’s lifetime or
for a term of years.
Charity
Upon the termination of the CRT,
the remainder of the assets passes
to charity.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
* Some important considerations for trusts exist. Trusts have inherent limitations and requirements that must be acknowledged/fulfilled in
order for these structures to accomplish their purposes. Trusts are not suitable for all business owners. For additional details about these
considerations please reference the back page of this document.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 20
Q:
What is a Charitable Lead Trust and what can make it an
appealing philanthropic vehicle for post-exit entrepreneurs?
Charitable Lead Trusts (“CLTs”)* are the “mirror image” of Charitable Remainder Trusts in that they
generate an income stream to the charitable organization of the donor’s choice. Following this,
any remaining assets are transferred to family members or other beneficiaries.
Figure 12: Use of a Charitable Lead Trust
Donor
The donor contributes assets
that are expected to appreciate.
Gift tax may be incurred upon the
transfer of assets into the trust.
Charitable Lead
Trust (CLT)
Charity
Beneficiaries
Upon the termination of the CLT,
the remainder of the assets passes
to (non-charitable) beneficiaries
free of additional gift or estate tax.
The CLT pays an
annuity to charity for a
term of years.
CLTs are often established in conjunction with private foundations and are also popular with individuals
seeking to offset an exceptional income event (e.g., the maturation of deferred compensation).
Consult with your Wealth Advisor and your Investment Representative: For additional
insight into CLTs, request a copy of the Barclays publication entitled The Charitable Lead
Annuity Trust (CLAT).
Q:
What are some of the common planning pitfalls that a
post-exit entrepreneur should be wary of?
Although each individual’s situation is unique, there are several common planning pitfalls that
regularly arise. For this reason, entrepreneurs who are in the process of determining whether or
not their trust and estate plans are satisfactory should ask themselves the questions highlighted
in Figure 13.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
* Some important considerations for trusts exist. Trusts have inherent limitations and requirements that must be acknowledged/fulfilled in
order for these structures to accomplish their purposes. Trusts are not suitable for all business owners. For additional details about these
considerations please reference the back page of this document.
21
Figure 13: Common planning pitfalls
Key questions and considerations
Is your estate plan current
and up to date?
Have you selected trustees
for the trusts that you have
established?
Are your investment accounts
structured appropriately?
• Many individuals craft an estate plan but fail to update it despite shifts in wealth profile,
alterations to family structure (e.g., birth of children) or changes in estate laws. All estate
plans should be revisited on occasion to ensure their continued effectiveness.
• Often, individuals are selected to act as trustees of trusts due to their relationship with the
grantor (e.g., friend, sibling). Special care should be taken to minimize the possibility for
conflicts of interest or bias to arise. Grantors should also ensure that the desired trustee has
the skill and disposition to act in a fiduciary capacity.
• Many investors maintain accounts and investments in structures that are suboptimal from
a tax or planning perspective. All investment holdings should be analyzed on a regular basis
to ensure alignment with the investor’s broader wealth plan.
• Property (e.g., assets, accounts, real estate) can normally be titled in four different ways:
(i) fee simple, (ii) tenancy in common, (iii) joint tenancy with right of survivorship, and
Are your assets
appropriately titled?
(iv) tenancy by the entirety. Rules and application vary depending upon the nature of the
asset (real estate versus non-real estate) and the jurisdiction (i.e., the state). Improperly titled
assets can completely undermine an estate plan and should be reviewed and addressed.
• A key consideration for post-exit entrepreneurs stems from the question of which
Are your assets sufficiently
protected from creditors?
approaches, structures, or methods provides a measure of asset protection.
• Common solutions include: (i) exemption planning, (ii) insurance, (iii) self-settled trusts,
and (iv) gifting.
Were you or your spouse
previously married?
Are you or any of your
immediate family members
a non-US person?
• Estate planning should be modified to reflect the complexities that arise when former
spouses, stepchildren, and blended families are involved.
• The application of income, gift and estate tax will vary depending upon such variables as the
citizenship, domicile, residence, and status (e.g., visa, green card, etc.) of individuals. Planning
should be tailored accordingly.
• Unique cross-border considerations can arise when individuals hold property abroad or
Do you own any non-US
property?
when their wealth planning entities (e.g., trusts, corporations, etc.) are considered “foreign”.
Planning must take these variables into account.
Does your wealth
management plan take into
account state tax issues?
Do your retirement plans
reflect the appropriate
beneficiary designations?
• State tax issues can often create significant planning hurdles and should be carefully analyzed
when preparing a wealth management strategy. Examples include: (i) community property
states, (ii) concerns regarding residency or domicile (e.g., with multiple homes), and
(iii) estate and gift tax imposition (and thresholds) at the state level.
• Many retirement plans are subject to “default” terms. Further, payout terms often vary
depending upon whether the beneficiary is the individual, his or her spouse or someone else.
Beneficiary designations should be reviewed for accuracy and appropriateness.
Consult with your Wealth Advisor: Your Wealth Advisor can work with you and your other
advisors to provide insight regarding each of the questions and considerations outlined above.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 22
Q:
What are some of the insurance requirements that a
post-exit entrepreneur should consider?
The divestment of an entrepreneur’s business interests will normally coincide with the need to revisit
insurance coverage of all types.
As the figure below illustrates, “key man” insurance will no longer be required (unless the
entrepreneur retains a continuing and essential role within the organization). Similarly, assuming
the former business owner’s wealth profile has been elevated by the liquidity event, temporary life
insurance coverage (i.e., term) can normally be eliminated in favor of permanent (i.e., whole, universal,
variable, etc.) life insurance. Lastly, property and casualty insurance should be reviewed for adequacy
as well as alignment with other “asset protection” mechanisms.6
Figure 14: Various types of insurance coverage for business owners
Term Insurance
Temporary life insurance
coverage for a period of years
– typically used for income
replacement purposes in the
event of an unforeseen death.
Whole Life,
Universal & Variable
Life Insurance
Permanent life insurance
coverage to fulfill long-term
estate planning needs.
Property & Casualty
Insurance
Key Man Insurance
Insurance protection on a key
individual(s) within a business
(i.e., business owner or key
employees) with the business
named as the beneficiary.
Insurance to protect against
losses to property and other
tangible assets – types of
coverage may vary depending
upon the type of business
engaged in.
Consult with your licensed Insurance Representative: Your licensed Insurance Representative
can work with you to rebalance your insurance coverage in a manner that best reflects your
changing needs.
6. See, Strategic wealth management for entrepreneurs and business owners (Volume 1: Forming a business).
This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to buy
insurance or the securities or other instruments mentioned herein.
Neither Barclays or its affiliated companies sell or solicit insurance. You should consult with your licensed insurance agent for further
information on insurance products or services.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with
your accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
23
Step 5
Understand your
risk tolerance
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 24
Q:
How does the concept of “understanding your risk
tolerance” apply in the post-exit entrepreneurial context?
The question of a client’s risk tolerance often serves as the focal point of an advisor’s guidance toward
investing. Although this is one component of appropriate wealth management, Barclays views it as a
facet that provides incomplete insight into how an individual should construct a portfolio.
In order to create a portfolio that is responsive to an individual’s financial profile, a strategic asset
allocation must be developed. Your Investment Representative will therefore work with you to
achieve two goals:
Goal #1 – Assess where you fall along the “Risk Profile” spectrum.
Figure 15: Barclays’ five risk profiles
Moderately
Conservative
conservative
Moderate
Moderately
aggressive
Aggressive
Goal #2 – Develop an optimal mix of asset categories that will serve to help maximize your return
for that particular risk profile.
Figure 16: Barclays’ nine asset classes
Cash/Short-Maturity Bonds
Developed Government Bonds
Investment-Grade Bonds
High-Yield and Emerging Markets Bonds
Developed Markets Equities
Emerging Markets Equities
Commodities
Real Estate
Alternative Trading Strategies
1. For illustrative purposes only.
25
A mix targeted to your risk tolerance1
Q:
How does the concept of “understanding your risk
tolerance” find unique application to entrepreneurs?
Post-exit business owners should carefully examine the question of their risk tolerance as it pertains
to their liquid investments. Indeed, many entrepreneurs become wealthy due to their business
ventures – undertakings which represent a concentrated and often risky amalgamation of wealth.
By contrast, the “post-exit” phase of an entrepreneur’s business life cycle may be characterized by
a redistribution of assets toward an investment portfolio that is meant to minimize “down-capture”
and lower the risk of eroding the wealth that the entrepreneur worked so diligently to amass.
Consult with your Investment Representative: In many instances, an entrepreneur in
the “post-exit” phase of wealth management will be over-allocated to specific investment
sectors. This may be due to the manner of exit (e.g., a stock acquisition) or the individual’s
predisposition toward investing in a sector that he or she understands particularly well.
In some instances, this can lead to a portfolio allocation that is riskier and less balanced
than he or she might imagine. For this reason, a client should work with his or her
Investment Representative to develop a tailored portfolio that takes into account his or
her true risk tolerance.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 26
Step 6
Understand your
financial personality
27
Q:
How does the concept of “understanding your financial
personality” apply to wealth management?
Although risk tolerance is a relatively ubiquitous concept within the wealth management industry,
the idea of examining it against the backdrop of behavioral finance is an approach that is somewhat
unique to Barclays. The basic tenet is that a greater degree of analytical accuracy can be obtained if
one understands a client’s risk attributes as well as his or her decision-making style.
A client’s risk attributes can be measured using three criteria:
>> Risk tolerance
>> Composure
>> Market engagement
Similarly, a client’s decision-making style is a function of three primary elements:
>> Perceived financial expertise
>> Desire for delegation
>> Belief in skill
Using these metrics (as obtained from the results of the Barclays Financial Personality
Assessment™ (“FPA”)), an Investment Representative is able to develop a tailored investment
portfolio strategy that is uniquely responsive to a client’s needs and wealth management goals.
Q:
How can the results of the Barclays Financial Personality
Assessment assist post-exit entrepreneurs who establish trust vehicles to structure their wealth?
TM
Because of the numerous benefits associated with trusts, they have proven to be a popular
planning vehicle for entrepreneurs. However, one question which often arises in this context is,
“Who should act as trustee(s) for the trust?”
Although many post-exit entrepreneurs consider using individual trustees to oversee their trust
structures, it can often be enlightening to have such proposed individual trustees complete an FPA
in order to ascertain whether or not they are suited for the fiduciary role.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 28
The illustration below reflects the FPA of a post-exit entrepreneur (solid line) who used the proceeds
stemming from the sale of his business to fund a family trust that held approximately $30 million.
Although he was considering having his brother act as the contingent successor trustee of the trust,
the results of his brother’s FPA (dotted line) indicated that he displayed a markedly low degree of
market composure.
Figure 17: A glimpse into our investment philosophy
Low
High
Risk tolerance
Composure
Market engagement
Perceived financial expertise
Delegation
Belief in skill
FPA of business owner
FPA of individual trustee
Composure stems from an individual’s degree of emotional engagement with short-term
considerations. Individuals with low composure can be predisposed to being sensitive to vacillations in
the market and thereby prone to buying high and selling low.
After discussing the results of his brother’s FPA, the entrepreneur decided to utilize a corporate
trustee. This ensured that the fiduciary oversight in place was more closely aligned with the financial
personality profile of the entrepreneur.
Consult with your Investment Representative: For additional insight into Barclays’
approach to behavioral finance, request a copy of the publication entitled Overcoming
the Cost of Being Human.
Consult with your Investment Representative and your Wealth Advisor: In the event that
trustees are being selected to oversee personal or familial wealth, it may make sense to
consider whether or not a corporate trustee should be considered as a possible alternative
to an individual trustee.
Visuals on this page are for illustrative purposes only.
29
Step 7
Invest your wealth
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 30
Q:
How does the concept of “investing your wealth” apply to
Barclays’ wealth management philosophy?
Whereas some investment advisors will begin a dialogue with advice regarding how best to invest
a client’s wealth, Barclays views this conversation as the logical and deductive conclusion to the
numerous steps that have preceded it.
As discussed, prior to deciding how best to invest their wealth, clients are encouraged to take the time
to thoughtfully:
>> Understand their wealth
>> Organize their wealth
>> Understand their risk tolerance
>> Understand their financial personality
Having successfully completed these prerequisites, individuals are then poised to work with
their Investment Representatives in order to leverage the insight that they have gained from
the undertaking.
Individuals can ultimately “invest their wealth” in a thoughtful and productive manner.
Q:
How does the concept of “investing your wealth” find
unique application to entrepreneurs?
For the “post-exit” entrepreneur, the question of how to invest represents an opportunity to tap into
the broad spectrum of services available within a global financial institution such as Barclays.
Ultimately, we can work with entrepreneurs in order to address a wide range of needs including:
>> Investment guidance (e.g., to invest the proceeds of a sale or IPO)7
>> Tactical access (e.g., to manage a concentrated stock position)
>> Liquidity access (e.g., to fund a new entrepreneurial venture)
>> Institutional access (e.g., to access research in equities and emerging markets)
7. For an example of Barclays’ intellectual capital in this regard, ask your Investment Representative for Wealth and Investment
Management’s latest issue of Compass.
31
Figure 18: A global capability set
Open architecture
Select proprietary
portfolios
Individual securities
Advisory
Trust company
Investment
access
Research, trade insight/
execution, origination
and syndicate
– Equities
– Credit
– Emerging markets
– FX
– Commodities
Timely idea flow
Niche markets
Institutional
access
A global
capability set
Tactical
access
Real-time access
Special execution
– Concentrated positions
– Custom hedging
– Block trades
Liquidity
access
Investment leverage
Cash flow
Tailored lending solutions
Entrepreneurial ventures
Consult with your Investment Representative: Your Investment Representative can provide
access to a range of offerings within Barclays and can marshal the institutional resources
required to help you to achieve your wealth management goals.
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 32
Step 8
Consider “next steps”
33
Q:
What are the key “next steps” that the post-exit
entrepreneur should consider at this juncture?
For many business owners, the post-exit phase of the entrepreneurial life cycle provides a plethora
of choices regarding how best to focus their energies going forward.
Figure 19: Post-exit wealth planning
What is the next step in the strategic life cycle of business ownership?
What do I need to
consider as I form
my business?
What do I need to
consider as I grow
my business?
VOLUME 1
VOLUME 2
Formation phase
Growth phase
What do I need to consider
as I transition my business?
VOLUME 3
What do I need to
consider after exiting
my business?
Transitioning to
family members
VOLUME 6
Post-Exit
considerations
or
VOLUME 4
Pre-IPO planning
Option 1
Become an investor
or
or
VOLUME 5
Pre-Sale planning
Option 2
Establish a new business
For some business owners, the opportunity to retire from commercial activities is extremely
appealing. If that is the case, an Investment Representative can serve an invaluable role in
constructing a strategic portfolio that helps address the client’s needs and aspirations.
However, some business people are inexorably drawn to the appeal of entrepreneurial ventures and
return to the commercial arena once again.
Of course, this is not to assume that the two undertakings – investing and entrepreneurialism – are
mutually exclusive. Indeed, many business owners successfully combine both pursuits. If that is the
case, the benefits that can accrue from a holistic and integrated wealth management plan can be
even more impactful and resonant.
Consult with your Investment Representative and your Wealth Advisor: Serial entrepreneurs who
may not have deployed sophisticated wealth management strategies upon the launch of their
first commercial venture may wish to do so upon the inception of future business endeavors.8
Consult with your Investment Representative: For those individuals considering the
establishment of a new business venture, consult with your Investment Representative in
order to explore the lending and credit facilities offered by Barclays.
8. A s a first step, such individuals should request and review the publication entitled, Strategic wealth management for entrepreneurs and
business owners (Volume 1: Forming a business).
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 34
35
Conclusion
A shared vision
According to the Global Entrepreneurship Monitor 9 report, there are currently almost
400 million entrepreneurs worldwide whose energy, passion, and business acumen collectively serve
as a primary driver of our planet’s economic and social development. They are men and women
from every country imaginable, and while the languages that they speak and the businesses
they start may differ, they all share a common goal – to strive for success.
Of course, one’s definition of “success” is largely driven by one’s perspective. It can refer to “creative
freedom”, “intellectual satisfaction”, or “professional fulfillment” – to list but a few subjective
definitions. For many business owners, however, the definition of “success” encapsulates a desire
to nurture and grow a business that is productive and profitable and to be able to enjoy the fruits of
that endeavor with their families and loved ones.
Unfortunately, too many entrepreneurs succeed in their commercial endeavors only to fail in their
wealth management planning. As a result, wealth that was so painstakingly created is diminished
or destroyed by unforeseen taxation, suboptimal investment performance, or poor strategic
wealth structuring.
This series – Strategic wealth management for entrepreneurs and business owners – strives to
provide guidance to entrepreneurs to help them to avoid these pitfalls.
Tailored advice
At Barclays, we seek to assist our clients by helping them to achieve their goals in the “right” way – a
good deal of which amounts to ensuring that they benefit from the “right” guidance. In our view,
such guidance amounts to carefully customized plans that address the holistic needs of our clients
in the context of their highly individualized circumstances and goals.
In today’s highly complex world, the path to successful entrepreneurship is fraught with both
challenges and opportunities. Regardless of which you encounter, we look forward to partnering with
you throughout your entrepreneurial journey.
9. Publication Year: 2011
Strategic wealth management for entrepreneurs and business owners | Volume 6: Post-Exit considerations | 36
Important considerations
Charitable Remainder Trust (CRT):
While a CRT is an effective philanthropic planning tool, it may not be a suitable charitable structure for all business owners. There are limitations,
considerations and inherent risks in utilizing a CRT. A CRT is an irrevocable trust and there is no guarantee that the stock value within a CRT will
appreciate. If no substantial appreciation occurs, then there is a possibility that little or no asset value will pass on to the charitable beneficiary at the
end of the trust’s term. The applicability of a CRT could be curtailed if legislation changes in the future. Consult with your legal and tax advisors for
more complete information.
Charitable Lead Trust (CLT):
While a CLT is an effective philanthropic planning tool, it may not be a suitable charitable structure for all business owners. There are limitations,
considerations and inherent risks in utilizing a CLT. A CLT is an irrevocable trust and there is no guarantee that the stock value within a CLT will
appreciate. If no substantial appreciation occurs, then there is a possibility that little or no asset value passes on to the non-charitable beneficiary
after the course of the trust’s term. The applicability of a CLT could be curtailed if legislation changes in the future. Consult with your legal and tax
advisors for more complete information.
Grantor Retained Annuity Trust (GRAT):
If the stock that has been transferred to a GRAT does not appreciate over the term of the trust, then all assets in the trust will revert back to the
grantor at the end of the GRAT term. A GRAT is an irrevocable trust which will terminate only by the end of the stipulated term or in the event of the
death of the grantor (where any trust assets will revert back into the grantor’s estate). Keep in mind that although a GRAT can be used to minimize
the impact of gift and estate taxes for the purpose of effective business succession planning, it may not be suitable for all business owners. The
applicability of a GRAT could be curtailed if legislation changes in the future. Consult with your legal and tax advisors for more complete information.
Intentionally Defective Grantor Trust (IDGT):
Although an IDGT seeks to minimize gift and estate tax consequences, it may not be a suitable structure for all business owners. There are
limitations, considerations and inherent risks in utilizing an IDGT. An IDGT is an irrevocable trust and there is no guarantee of asset appreciation
within the structure. When setting up an IDGT it is important for a business owner to note that a portion of his or her annual gift tax exemption may
be used up by establishing the trust. The applicability of an IDGT could be curtailed if legislation changes in the future. Consult with your legal and
tax advisors for more complete information.
Trust Structure:
A trust is a useful planning tool for the purpose of estate and wealth planning; however, trusts may not be suitable for all business owners. Many
trusts are irrevocable and cannot be retracted once they are put in place. There may also be a mortality risk associated with some trust planning. In
such instances, the purpose of a trust may not be fulfilled if the grantor passes away prior to the trust’s termination date. Consult with your legal and
tax advisors for more complete information.
Private Foundation:
A Private Foundation is an effective philanthropic planning tool; however, it is not a suitable structure for all business owners. There are risks and
considerations to be mindful of when contemplating the establishment of a foundation. A Private Foundation can be set up for a charitable purpose
that lasts for generations, yet it requires ongoing maintenance (and associated fees) to remain viable. There are a variety of compliance and
administrative requirements that must be met. Some of these include: ensuring that annual distributions are made for charitable purposes; limiting/
restricting any investment holdings in private businesses; verifying that investment decisions do not contradict the exempt purposes of the
foundation; and ensuring that all expenditures go toward furthering the charitable intent of the foundation. A failure to comply with all requirements
set forth by the Internal Revenue Service (IRS) could cause the Private Foundation to be the subject of enhanced scrutiny (or potential disallowance
of charitable status). Individuals contemplating a Private Foundation should consult with their tax and legal advisors for a full list of potential risks.
DAF:
While a DAF is an effective philanthropic planning tool, it may not be a suitable charitable structure for all business owners. There are limitations,
risks and considerations to be mindful of when utilizing a DAF. A DAF is a charitable fund that an individual can invest through for a philanthropic
purpose. There is, however, no guarantee that the invested assets will appreciate in value. Additionally, once assets are placed in a DAF, an
individual relinquishes his or her right to determine exactly which cause(s) will benefit from these assets and how to invest such assets. This
becomes the determination of the fund administrator. Some fund administrators do allow for recommendations or requests from investors, though
this is not guaranteed. A DAF is a useful charitable planning tool that does not require ongoing maintenance or administrative responsibility on the
part of the individual funding the DAF; however, there are associated limitations to an individual’s involvement in investment decisions and
ultimate asset distribution.
FLP:
While an FLP can be a useful planning tool, care should be taken when setting up (and operating) an FLP structure. It is essential that individuals
adhere to all operating requirements and accounting procedures imposed upon an FLP. A few key considerations that individuals should be mindful
of when contemplating an FLP include: the importance of valuing partnership interests prior to making any structured gifts; realizing that limited
partners lack control over the underlying partnership assets (and that their associated interests in the FLP lack marketability); and recognizing that
partnership interests increase in value only if the underlying business (and/or the underlying investment assets) becomes increasingly profitable
(though this cannot be guaranteed). Individuals considering an FLP structure should be mindful of the associated limitations and should consult
with their legal advisors to discuss all risks in the context of their unique circumstances.
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Retirement Account General Disclosure
This report is intended to provide only investment education and information and is not intended to constitute “investment advice” or an investment
recommendation within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”) or Section 4975 of the Internal Revenue Code
of 1986 (the “Code”). Any investment products or managers specified in this report are for illustrative purposes only and other products or managers
may be available or appropriate to fulfill the particular asset class. You are solely responsible for evaluating and acting upon the education and
information contained in this report, and you will not rely on this report, the information contained herein, or Barclays as a primary basis for your
investment decisions. Moreover; any discussion, analyses, or information furnished by Barclays regarding its advisory services, including sample asset
allocations or discussions of potential investment options or alternatives, should not be considered investment advice or part of any advisory service
offered by Barclays. Such discussion, analyses and information is provided for educational purposes only and for the purpose of allowing you to
understand and evaluate Barclays’ various advisory services and available investment alternatives. Accordingly, you acknowledge and agree that:
(i) any and all discussions, analyses, and information furnished by Barclays in connection with your retention of Barclays or investment in an investment
alternative was not intended to and shall not serve as a primary basis for your decision with respect to any investment determination; (ii) Barclays is
not providing investment advice or otherwise acting as a fiduciary under the Investment Advisers Act of 1940, ERISA, or Section 4975 of the Code in
connection with such discussions, analyses, or information; and (iii) any and all asset allocation and investment option decisions, both initial and
ongoing, are made independently by you and without reliance upon any advice or recommendations of Barclays.
Important Disclosures
Diversification does not guarantee a profit or protect against a loss.
Investing in securities involves a certain amount of risk. You are urged to review all prospectuses and other offering information prior to investing.
Past performance is not a guarantee of future performance.
This material is provided by Barclays for information purposes only, and does not constitute tax advice.
Neither Barclays in the US nor its Wealth and Investment Management employees in the US render tax or legal advice. Please consult with your
accountant, tax advisor, and/or attorney for advice concerning your particular circumstances.
Barclays does not guarantee favorable investment outcomes. Nor does it provide any guarantee against investment losses.
“Barclays” refers to any company in the Barclays PLC group of companies.
Barclays offers wealth management products and services to its clients through Barclays Bank PLC (“BBPLC”) and functions in the United States
through Barclays Capital Inc. (“BCI”), an affiliate of BBPLC. BCI is a registered broker dealer and investment adviser, regulated by the U.S. Securities and
Exchange Commission, with offices at 745 Seventh Avenue, New York, New York 10019. Member FINRA and SIPC.
The wealth management products offered by Barclays in the United States clear through, and where applicable, assets are custodied by, Pershing LLC,
a subsidiary of the Bank of New York Mellon Corporation. Pershing LLC is a member of FINRA, NYSE and SIPC.
Barclays Bank PLC is registered in England and authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
the Prudential Regulation Authority. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP.
©Copyright 2015 Barclays.
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