Tips to transfer businesses and join the Greatest Stewardship Opportunity

The Greatest Stewardship Opportunity of our lifetime is upon us – Is your business prepared? 

It’s projected that wealth transferred through 2045 will total $84.4 trillion—$72.6 trillion in assets will be transferred to heirs, while $11.9 trillion will be donated to charities (Source: Cerulli). This is commonly known as the Great Wealth Transfer. We call it the Greatest Stewardship Opportunity.

We sat down with NCF’s Gift Planning Attorney, Daniel Hicks, to help business owners and their advisors understand how to prepare for transferring their business to the next generation and how to do it with wisdom and prudence, keeping their Giving Strategy and generosity goals in mind.

Daniel, why is it important for Christian business owners to prepare for The Greatest Stewardship Opportunity? 

Many Christian business owners believe that God owns everything – sharing all that God has entrusted them with while resting in the assurance of hope that He will turn it into a beautiful legacy. 

At the end of the day, everything is going to end up in three buckets: family, taxes, and charity. Business owners have a choice when deciding how to allocate their ownership among these three buckets. Transferring a business, during life or at death, is the opportunity of a lifetime. How much can be gained or lost for eternity boils down to wise stewardship and planning. Timing is everything when it comes to increasing the amount a business owner can give, and it can potentially multiply their impact for the causes they love. 

How can business owners take advantage of the Great Wealth Transfer in a way that increases their giving capacity?

Statistics indicate that 90 percent  of wealth is held in non-cash assets, but only 20 to 25 percent of giving comes from non-cash. If most of what is on a business owner’s balance sheet is company stock, that’s an opportunity for radical generosity! Business owners planning to give from their balance sheet before or after death can plan for more of their wealth to go to charity. And with rising interest rates, cash giving becomes even less attractive. 

How can business owners/entrepreneurs structure their giving for the biggest impact in light of higher interest rates?

If your net worth is down because of interest rates, it’s a great time to transfer interest to family and charity.  When that interest appreciates, both family and charity benefit from the growth. Later on, you may decide to sell the gifted interest, which will release even more funds for charitable purposes. 

Daniel, what should business owners do to prepare for transitioning their business to the next generation?

The reality is: there will eventually be a forced transfer of wealth upon your death, and your money will be divided among the three buckets mentioned earlier:  family, taxes, and charity. Planning for your wealth transfer can be a complex process with many practical, emotional, and financial implications.  Here are three things you can do to prepare to transition your business: 

1. Share your plans early: You may want your children to inherit your business – but what if they aren’t interested in owning it?  To avoid surprises or challenges, have candid conversations with your spouse, children, and business partners, and involve an estate planning attorney who shares your heart for wise stewardship. 

2. Get expert guidance: What does it look like if charity owns interest in your business? Business owners can structure transfers to ensure generosity remains a part of their business’ future. If charity becomes a passive shareholder, profits will flow through for charitable giving, and if all or part of the business is eventually sold, the proceeds go to charity. NCF can walk you and your advisors through these scenarios and other creative giving solutions to help you maximize impact for the causes you love.  

How can business owners prepare the next generation well for stewarding the business they’re taking over?

It’s important that the next generation shares your vision for wisely stewarding all God has entrusted to you. If your children don’t share your worldview and love of Christ, it’s difficult to pass those values on through your business. Take time to prepare your family.

When we leave our children to plan with urgency, the process tends to be stressful. Often, decisions are made more out of necessity and less out of joy and glory for God. Work on aligning your hearts first, and then plan for the transition – the earlier, the better to get the most impact from your money. 

How we steward our wealth for God’s glory is extremely important, and the process can be complex and emotional. With God as our counselor, we can turn the greatest wealth transfer of our lifetime into joyful giving. We’re here to help.