Henry and Shia Ming
Age: Early 60s
Citizenship: Hong Kong (with second residence in U.S.)
Net Worth: $90,000,000
Henry owns a company that manufactures microwave ovens in factories in Southeast Asia. The company is privately held. His wife Shia-Ming holds a 25% minority stake; her family loaned Henry the start-up capital. Because his products are private-labeled, Henry’s success is dependent on his personal relationships with distributors and retailers.
Henry and Shia-Ming have two sons and two daughters; all now live in the U.S. or Canada. Henry has been advised by his doctors to reduce his workload for health reasons.
He has confided in a close personal friend who was his college roommate that he wants to sell the company so he and Shia-Ming can move to the United States to be closer to their children. But he feels uncomfortable talking about his health and family with his legal and accounting advisors.
Henry’s friend referred him and Shia-Ming to The Pacific Bridge Companies (TPBC), stressing the company’s reputation for integrity regarding client information confidentiality. Henry contacted TPBC and scheduled a meeting.
As part of the Ohana Methodology, TPBC helped Henry and Shia-Ming identify their current concerns as well as what they wanted in their new life in the U.S.:
- Henry and Shia-Ming’s biggest concern is the toll that the business is taking on Henry’s health. They want to sell the company as soon as possible.
- Henry worries that if his distributors and retailers discover he’s planning on selling – or that he has health problems – they’d cut back on orders, which would hurt business and reduce the company’s value and sale price.
- Even if Henry is able to sell the company, Henry and Shia-Ming are unsure they can duplicate the quality of life they enjoy in Hong Kong in the U.S. – and still leave a significant estate to their children and grandchildren.
- In selling the company, Henry is insistent that Shia-Ming’s minority stake be protected. This would provide her with her own wealth and income independent of Henry, in the event something happened to him.
They agreed that the bulk of their estate should pass to their children and grandchildren.
Financial Planning Focus:
Income Protection and Wealth Preservation
Wealth Creation, Accumulation, and Distribution
Wealth Transfer to Heirs and Future Generations
The Financial Alternatives and Strategic Planning proposal recommended:
Sale of Company: Identifying a discreet investment banker to help ready and eventually sell the business.
Protection of Henry’s Financial Position and Wealth Transfer: Combination of gifting, loans against stock, family trusts and life insurance equal to approximately 50% of the current value of Henry’s shares in the company.
Protection of Shia-Ming’s Ownership Stake: Convert her shares to preferred stock to reduce volatility.
U.S. Estate Taxes: To be funded through life insurance polices on both Henry and Shia-Ming.
Henry approved the plan, requesting that TPBC be especially circumspect in soliciting the services of an investment banker. TPBC worked with Henry’s U.S. attorney and Hong Kong life insurance agent to establish the trusts, purchase the life insurance policies, and secure a bank loan to fund the policies. TPBC also worked with his Hong Kong tax advisor to screen and interview prospective investment bankers, who were only then introduced to Henry.
Evaluation and Review Schedule: Ongoing until sale of company; then annually. A further estate planning review to be scheduled once the company is sold and Henry and Shia-Ming have relocated to the U.S.
Outcome: Henry and Shia-Ming have peace of mind that the confidentiality necessary for them to execute their exit strategy will be maintained, enabling them to secure their desired sale price and establish a U.S. residency comparable to their life in Hong Kong, while still providing them with a significant estate to leave their children.