ELITE ADVISOR BEST PRACTICES
The “Green Box”
How advisors can help family-owned businesses survive the loss of an owner
By Tom Hubler
- No matter how well run a family business is, a single tragic event can come out of nowhere to wreak havoc on the financials and the family.
- Most family businesses are reluctant to prepare “early” for the loss of the entrepreneur who heads both the business and the family.
- Having clients create their own Green Boxes may seem arduous, but it will significantly assist their survivors in perpetuating the family business and their legacy.
As a follow-up to parts One and Two of the article, “Preparing for the Unthinkable: Loss of the Entrepreneur,” a former client shared a story about the Green Box that I find particularly relevant. The Green Box concept closely follows the ideas expressed in the articles and creates a to-do list for all entrepreneurs. The Green Box can help all family-owned businesses survive the loss of an owner.
A father and son were in business together in Australia. During a telephone call with his son, the father told his son that he would be flying to New Zealand the next day to close an important business deal. The son, who was a pilot in the Air National Guard Reserves, warned his father of the potential for typhoons in the area where he was traveling that might make travel hazardous. The father responded with laughter and reminded his son that if anything tragic happened, he should get the Green Box out of safekeeping in the closet.
The next day the father was killed en route when his plane crashed into a mountain on the north side of the island due to low-visibility weather conditions. Several days after the father’s funeral, the son recalled his father’s words to get hold of the Green Box. The son called his mother to retrieve the Green Box and bring it to the family’s attorney. Inside the box they found 28 envelopes that contained the following:
- Letter to his wife
- Letter to each of the couple’s children
- Letter to the company’s employees
- Letter to his parents
- A list of the five most important employees in the company and their strengths and weaknesses
- Off-balance-sheet deals
- An organizational chart
- Details of any company trusts
- A list of personal and business associates who should be contacted in the event of his passing
- A list of deals in process and an evaluation of them
- Strategy that he was thinking about and had not yet shared with anyone
- A list of trusted advisors and their roles (persons who may or may not be working with the company), such as attorneys, accountants, etc.
- Instructions not previously addressed in his will
- Copies of power of attorney documents
- Copies of his passport and birth certificate
- Copies of all his credit cards
- Copies of physical property titles
- Information about his personal stock portfolio
- Details of his life insurance—both personal and company-owned
- Details of all other insurance policies
- Copies of all personal property valuations (jewelry, guns, art, collectibles, etc.)
- Complete list of his passwords
- A personal financial statement
- Extra passport photographs
- Medical and dental charts
- Funeral and burial instructions
- Mementos and instructions for whom they were to be distributed
While creating your own Green Box may seem arduous, it will significantly assist your survivors in perpetuation of your business and your legacy.