Help Your Co-op Legacy Live On! Webinar on Family Business Succession & Retirement Planning You’ve worked hard to run your business the right way — by investing the time, effort and money to not only succeed, but also support the cooperative way of life. You may have already prepared a will covering your personal assets — but what will happen to the co-op business you nurtured all those years? In this webinar, Gary Pittsford, CFP®, president and CEO of Castle Wealth Advisors, will provide insights into the simple steps you can take today to ensure that your commitment to the co-op cause will live on. With over 40 years of experience helping business owners in the co-op community, Gary will share proven tips and strategies for protecting the legacy you’ve worked so hard to build. Participants will: - Learn valuation techniques for family businesses - Get proven techniques for protecting family’s net worth - Gain insights into succession planning (for your children and others) - Hear expert advice on reducing income taxes and generating retirement income Who Should Participate? - Business owners belonging to co-ops - Members of co-ops ages 50 to 70

1. Family Business Succession
and Retirement Planning
Presented by:
Gary Pittsford, CFP ®
President and CEO
Castle Wealth Advisors

2. A sampling of Castle Wealth Advisors’ past and present clients:

5. Common questions:
Do I transition the business to the family
or an outsider?
What is this business really worth?
Will I have enough income in retirement?
How do I protect my assets and my family?
If I transfer stock to a child, what if they get
divorced or die prematurely?
How can I reduce the taxes?
How do I start the transition/exit process?

6. Business entities
Type of entity
S-Corporation
C-Corporation
Limited liability company
Family limited partnership
General partnership
Sole proprietorship

8. Possible valuation methods
Net asset approach
Capitalized earnings approach
Market approach
Liquidation approach

10. Discretionary cash flow for business
valuations Yours
Net profit before tax $ 100,000
Add-backs:
Some salary $ 40,000
Interest $ 3,000
Depreciation $ 21,000
Country club $ 10,000
Excess rent $ 25,000
One time expenses $ 20,000
Health insurance $ 12,000
401(k) corporate payment $ 2,000
$233,000

11. Family member review
How long will parents/owners work?
Which children will take over the business?
Are there children not in the family business?
Planning for in-laws, grandchildren and others
Planning for key employees

12. Transition options
Gift stock to the next generation (with discounts)
Sell stock to the next generation
(installment note, SCIN)
Use of voting and non-voting stock
Who will keep voting control
Inherit stock in business or other entities

13. Retirement security
Salary
Directors fees
Sell Goodwill
Consulting fees
Deferred compensation
Sale of business
Rental income
Retirement plans
Personal assets

14. Tax options for the buyer and seller
Seller Options Buyer Options
A. Federal Income Taxes 35% 35%
B. Tax on Interest 35% Deductible
C. Tax on Recaptures 25% N/A
D. Tax on Deferred Compensation 35% Deductible
E. Tax on Goodwill 15% Deductible over 15 years
F. Tax on Non-Compete 35% Deductible over time
G. Tax on Directors Fees 35% Deductible
H. Tax on Consulting Fees 35% Deductible
I. Tax on Stock Sale 15% 0%
J. Federal Gift Tax Exemption (2012) 35% -
A. $13,000 per year
B. $5,120,000 per lifetime
K. Federal Estate Tax Exemption (2012) 35% -
A. 2009 - $3,500,000 exempt
B. 2010 - $0 exempt
C. 2011 - $5,000,000 exempt 35%
D. 2012 - $5,120,000 exempt 35%

15. Estate documents to protect assets
Will and revocable living trust (all stockholders)
Titling of assets
Beneficiaries
Protect income for both spouses
Stock Redemption Agreement
Who gets voting control
Pay-out to children not in the business

16. Stock redemption agreements
provide protection
Items to look for:
Is there a specified price in the agreement, or is there a
formula to calculate it?
Is there a provision to purchase the deceased’s stock over a
5-10 year period?
Is there life insurance to cover the purchase of stock at
death and is it enough?
In the case of disability, is there a provision to purchase the
stock over time, and at what price per share?
Does the document provide protection for the business
and family in the event of death, divorce, personal
bankruptcy, disability, termination or retirement?

17. Choosing your advisors
Attorneys
(Business, estate, real estate)
Accountants
(Business, personal)
Financial Advisor
(Non salesman, fee-only, fiduciary, independent)
Banker
(Good with family businesses)

18. Business Entity
Family Members Transition
•S Corp.
•Parents Options
•C Corp.
•Children in business •Gift
•LLC
•Children out of business •Sell
•FLP
•Voting
•General partnership
•Non-voting
•Sole proprietorship
•Inherit
•Non-family
Retirement Security Estate Plan
Tax Options
•Salary •Wills
•Good for seller
•Director fees •Trusts
•Good for buyer
•Consulting •Stock redemption
•Rental income
•IRA’s
•Deferred comp.
•Sale

19. Business Family Transition Retirement Tax Estate
Entity Members Options Security Options Plans
Business Owner
Family Business Management
Family Wealth Management

21. Gary Pittsford, CFP ®
President and CEO
Castle Wealth Advisors
gary@castle3.com www.castle3.com 888.849.9559
Connect with us: Gary Pittsford
Castle Wealth Advisors, LLC
@CastleWealth