Wealth transfer secrets for pizzeria owners!

Supposedly, F. Scott Fitzgerald was waxing eloquent on his fascination with the wealthy. "The rich are different than us" opined Scott…Earnest Hemingway is reported to have shot back, "Yeah, they have more money!"

Once you've managed to get your fortune, you need to take care in passing it on to your children and their children. I've looked at the history of some great family fortunes and you'd be surprised at the simplicity of what they do. You can do it too!

When you boil it down, it's really pretty simple. First, wealthy people have a game plan. They have a vision that goes beyond their own lifetime and that of their children. They frequently plan three or four generations out.

There is an old adage: "Rags to Riches To Rags". The hidden meaning is that one generation makes a significant amount of money, but their children can't hang on to it so their grandchildren go back to the beginning, or to "rags".

Second, wealthy people hold on to hard assets. Look at the real estate wealth of America's richest families and you will see that the core of the fortune has been in the family since the founder got his/her hands on it. There's a truism about real estate. "God is not making any more of it!" So, if you make a good buy, hold on to it and to it that it's passed on to succeeding generations in an uninterrupted fashion.

Third, the wealthy take the government very seriously. They either know the rules or hire people who do. They take advantage of what is legally available and then some.

Fourth, wealthy people "execute"…they do something. It is not enough to know something in the abstract; you must do something and put that knowledge to use.

Fifth, wealthy people realize that the real business of business is making money.

It is not the thing you do to make money. It is not the thing you do to make money that's so important, what's important is that you make money. Pay attention to your money, or someone else will. So, what does all this mean to you?

I've come up with a simple five-point plan that you can put to work now, and with some discipline and attention, can bring you results that you would never believed possible. You don't need a Harvard Ph.D. or a C.P.A. to do these things, just some real desire to make it work. Here we go.

First, develop your own personal game plan that looks beyond yourself and even beyond your children. If you truly want to be the founder of your family fortune, you have to do this now. Now, this should take some time and should have some detail, but not too much. The further out in time you go the less detail you can plan, but you can plan the broad direction of things. For example: If I see my family as professionals, I need to make plans for the education of my children. I need to fund the current generation and 'motivate' the next generation and even the succeeding generation with some ties and rewards for following my direction. In broad terms, this means setting out real world plans for getting the short term funds for my kid's schooling and back-stopping, that with chunks of short term high value life insurance to guarantee

the completion of the plan. Going out to the next generation, you need to put your plans in writing. Make a will with specific direction for the passing of assets. That might mean a will with specific grants to future generations for use in professional education. A good lawyer will bang this out in a matter of minutes.

Second, determine what you want to be held rather than disposed of. If you have a piece of real estate that you just know is a money maker or a rare find, you can arrange for that item to be held by future generations rather than disposed of for cash. For example: I personally know of one family that bought a piece of waterfront real estate that was just gorgeous. It was purchased for peanuts about 50 years ago and today could not be touched for 20 times the purchase price. Under the principal of "God is not making any more," this thing would appreciate at least another 20 times.

There was considerable concern that on the passing of the founding generation the property would be sold for the profit. The problem was that once it was sold, the family could never get that caliber of asset again. So, the decision was made to pass that asset to a "family trust" that could not sell the real estate. The asset was set-aside for future generations with the ability to enjoy or leverage the asset, but not to sell it.

Third, take this seriously, I don't care if today you are living in a rented studio apartment with an 18-year-old car and your first child is due in two months. If you make the right plans and take the right steps, that kind of situation will be temporary. Real world translation: Get the best information and advice you can afford and upgrade when possible

Don't go to a department store kiosk to do your taxes. Find a C.P.A. that's just starting out and needs the work. Discuss your plans and get the best tax advice out there. You just can't know what the C.P.A. knows. You will discover things you never thought possible.

If your situation is slightly better (let's hope), then it's even more important. If you are a family with a home and two kids, you have a balance sheet that approaches that of many small businesses. You need to think about things like cash flow, short-term debt, long term funding, asset basis and a host of other things.

Fourth, do something! Do these three things now:

  1. Make your plan – If you don't, someone else will do it for you and it won't be pretty. People with very different interests and ideas will control your future, and the future of your family.
  2. Get your tem together – Get a lawyer that knows wills and estates, get a C.P.A. you can talk to and get an insurance agent that has your interest at heart.
  3. Communicate – Tell these people what you want and get it all going. It doesn't matter if it's a 100-point plan and only one point can be done today. Do what can be done and plan for the rest.

Fifth, monitor and review. In the end, you are responsible for all of this. You can set up an elegant plan, but if it falls apart, it's your fault. Step up and monitor what goes on, make course corrections as needed and even change the basic plan if circumstances change. Don't become stuck in cement. If they discover oil in your back yard, the world will change overnight. Make allowance for change. The only constant thing is the constancy of change. Review and adapt on a consistent basis. Is once a year enough? Maybe… it depends on you and what your plan is.

Finally, fund for the future. I really believe that everyone should buy huge "iceberg size" chunks of term life insurance as early as they can. It doesn't matter if you have no cash and a mortgage the size of Mount Rushmore. With a good chunk of life insurance, you can guarantee your short-term plan while you make the money for the long-term goals. Remember that we are going to be realistic. You don't default on the mortgage to buy life insurance. Fit it in the plan or change the plan to fit. You can, and must, secure the financial future of your family. It's all in your hands. If you have any questions, I invite you to contact me, P.J. Giannini, at 201-045-34100 or Fax 201-945-2908 or go to www.pizzasure.com and email us.