Young entrepreneurs often don’t give enough (any!) thought to managing their personal wealth and how to best transfer that wealth. Wealth transfer planning is best to consider during the startup phase and will be most effective if you deal with it early on. In this presentation, Darin Donovan, Shareholder for Hopkins & Carley, and Glenn McCrae, Chief Strategy Officer for Early Growth Financial Services discuss the simplest strategy for wealth transfer, the transfer tax landscape, trust structures, and more.

1. The Startup
Founder’s Guide to
Wealth
Management
Darin Donovan, Esq.
Shareholder
Hopkins & Carley
Glenn McCrae
Chief Strategy Officer
Early Growth Financial Services
#wealthmanagement

3. Personal Planning Opportunities
During Startup Phase
• While moving your company toward an
IPO or M&A, keep in mind that there are
personal planning opportunities
available
• These opportunities are time sensitive
• Know and understand what you have

4. Know Your Assets
• To understand your personal planning
opportunities, you must understand your
assets
– Stock Options: ISOs, NonQuals
– Restricted Stock
– Founder’s Stock
– Vesting
• Professional Income Tax planning
assistance

5. Transfer Tax Landscape
• Income Tax compared to Estate/Gift Tax
• Federal Estate/Gift Tax: $5.34 million
lifetime exemption; 40% tax rate
• Transferring assets before event can
make gifting much more effective than
after
• Capturing post-transfer appreciation

6. Gift Tax Exemptions
• Marital Deduction
• US Citizens – unlimited deduction
• Non-US Citizen – $145K annual deduction
• Annual exclusion – 14K/donee
• Medical/education – not gifts
• Lifetime exemption – 5.34 million
• File gift tax return – FMV at time of
complete transfer
• Hard to value assets

7. Gifting: Types of Assets
• Stock: private/public
• Stock options
• Disqualifying dispositions
• Vesting
• Partnership/LLC/carried interest
• Real property

8. Gifting: Methods
• Outright
• Custodial Accounts – 18/21
• Irrevocable Trusts

9. Simplest Strategy:
Outright Transfers of Stock
• Best for siblings, parents, responsible
children over 18 (or older)
• Not appropriate for stock options
• Annual Exclusion/Lifetime exemption
• Gift tax filings/valuation

10. Transfers into Irrevocable Trusts
• Best for minor children, grandchildren
other beneficiaries where financial
abilities are questionable
• Annual Exclusion gifts; use of lifetime
exemption
• Trust structures – funds available on
timetable client determines

11. Leveraging Gift Transfers
• Grantor Retained Annuity Trusts
(GRATs)
• Sales to Defective Grantor Trust

12. More Sophisticated Techniques
Grantor Retained Annuity Trust (GRAT) –
future appreciation to beneficiaries
• Government set “hurdle” rate” (July of
2014: 2.2%)
• Timing of transfer
• Asset selection
• Diversification of transfers over time
• Limitations

13. More Sophisticated Techniques
Defective Grantor Trust – out of estate,
but liable for Income Tax
• Growth/appreciation
• Nonrecognition Transactions
• Safety valve for Income Tax Liability
• Generation-Skipping Transfer (GST)
Planning

14. Post-Liquidity Event
• CRTs/CLTs
• Family entities
• Charitable giving

15. 15
Thank You and Q&A
Hopkins & Carley, A Law Corporation
200 Page Mill Road, Suite 200
Palo Alto, CA 94306
T: (650) 804-7600
www.hopkinscarley.com
@HopkinsCarely
Darin Donovan, Esq., Shareholder
ddonovan@hopkinscarley.com
Glenn McCrae
gmcrae@earlygrowthfinancialservices.com
EGFS Headquarters
2033 Gateway Place, 5th Floor
San Jose, CA 95110
T: (415) 234-3437
www.earlygrowthfinancialservices.com
@EarlyGrowthFS