Ed is a first-generation wealth creator and the sole owner of a successful business. Ed is divorced with two minor children – Jennifer and Andy. One of the things that keeps Ed up at night is who will help guide his children and oversee their interest in the business in the future or in the case of his untimely passing. His children’s mother isn’t a viable option to serve in this role and Ed wants to ensure Jennifer and Andy would have guidance in life and in business. Ed has already turned over the day-to-day management of the company, so his primary concern is the oversight of shares he has already placed in dynasty trusts for the benefit of his children, grandchildren and future generations. He has a passion for the business and believes it will continue to grow for years to come and wants a shareholder voice to continue into the future to ensure the company focus is maintained and the shares continue to grow for his lineal descendants. 

In considering his desires and estate planning objectives, Ed explored many options for successor trustees of his trusts. He has surrounded himself with trusted advisors today, but was concerned about future advisors. After seriously considering a corporate trustee option, as well as continuing with individual trustees, Ed determined that an Ohio Family Trust Company (“FTC”) provided him with the best solution for his objectives. 

Ed created an Ohio Unlicensed FTC to be the trustee of the trusts he created for his lineal descendants.  For the Board, he selected two trusted advisors to serve along with him. The Committees of the FTC are also populated by trusted advisors. One of these Committees is an Education Committee – responsible for providing a wide range of education for Jennifer and Andy – from financial education to wellness to understanding capitalism. Populating the Education Committee with trusted advisors allowed Ed to be very specific about the topics he wanted covered with his children should he not be here to provide this education himself. 

Although the intention is for Ed to be very involved with the FTC during his lifetime, Ed wanted to ensure Jennifer and Andy were surrounded by the right team  should Ed be unable to continue to select the advisors. To accomplish this objective, detailed job descriptions were created for all positions at the FTC. Ed thoughtfully communicated the criteria for the advisors serving in the various roles, from required experience to preferred criteria outlining who will guide his family in the future. He also considered at what ages and to what extent he would like Jennifer and Andy to participate in the selection of directors of the FTC, or even have the option of serving as directors themselves. With the FTC structure in place, Ed can now sleep more easily.

This case study demonstrates the new trend in establishing an FTC at the first or second generation. Historically, many families waited until the third generation to consider creating an FTC. However, by the third generation there are many more individuals (both family members and spouses) involved and creating consensus can be much more difficult. Truly visionary first and second generation family members like Ed are now looking to establish a family trust companies as a way to keep the family together and the family business privately held across generations.