Tag: wealth management

May 19th

Overview of Investments in Nevada

Dean Byrne Featured in Nevada Business Magazine:

Investing is a balancing act between risk and reward in the best of times, but today’s uncertain economic climate and fluctuating markets present an unprecedented challenge for investors. While some people choose to stay with traditional options like money market funds and government bonds, others are taking on more risk with hard-money lending and alternative investments – everything from cryptocurrency to classic cars.

“Given the volatility in the equity markets, some investors are reducing risk in their portfolios due to a slowing economy, stubborn inflation, and uncertainty around trade policies,” said Dean Byrne, regional manager of The Whittier Trust Company of Nevada, which has offices in Reno, Portland, Seattle, and Austin, Texas. Byrne said the U.S. is currently in a “risk-off” environment, in which investors are more risk-averse and are selling assets like stock and moving their money to lower-risk options. As a trust management company, Whittier Trust offers a wide range of financial services. Its investment management team handles core assets, such as equities, fixed income and real estate.

In general, Nevada follows national trends in investing, such as increasing interest in digital assets like cryptocurrency, which have become widely accepted, even by institutional investors and hedge funds. Technology is also driving increased interest in companies that supply the energy needs and the physical infrastructure (think data centers) for the growing artificial intelligence (AI) sector. “We see an enormous amount of capital being deployed into public and private AI investments on the expectation of continued growth and attractive returns,” said Byrne.

The migration of wealthy Californians to Nevada is changing the nature of investing in the Silver State, according to Nevada Secretary of State Francisco Aguilar, whose office performs registration and oversight of securities, securities brokers and dealers, and investment advisors. “Enclaves like the Summit Club in Summerlin bring the investor-minded type of individual to Nevada, and with that comes more opportunity to invest in private placement deals, real estate offerings, private credit offerings, cryptocurrency, gold and silver,” he said. “[These new residents] are sophisticated investors who are looking to diversify their portfolios. There’s more investing in Nevada now than in previous years because these people bring their money and their investment portfolios with them.”

One option for savvy investors looking for diversification is hard money lending. “We specialize in private lending, with multiple lenders joining together to fund loans on Nevada real estate,” explained John Blackmon, owner/broker of NV Capital Corporation, a private lending and investment brokerage based in southern Nevada. “Our property-backed hard money loans make financing available on a wide variety of single-family and multi-family homes, business buildings, and land for development. Many people choose a trust deed investment because they are looking for more secure, high-yield returns. If properly structured by a specialized broker, trust deed investments have the potential to yield favorable returns – especially when you look at other investment options with similar risk profiles. That’s because your risks are mitigated by the value of the property being used as collateral against the loan.”

People who don’t mind taking some additional risk may consider any one of a number of alternative investments. “Alternative investments are a broad asset class, but narrow down to investments outside of traditional cash, bonds and stocks,” said Byrne. “Real estate, cryptocurrencies, blockchain, private equity, hedge funds, commodities, even collectibles like art, coins and classic cars, fall into the alternative investment bucket.”

Byrne pointed out that owning a business could also be considered a form of alternative investment, with its own level of risk and reward. “Business owners usually reinvest all their profits into their own company,” he said. “In essence, they’re investing in one stock, and they’re comfortable with that risk. Yes, it may keep them up at night sometimes, but they know it inside and out, and it’s familiar.”

He added that Nevada provides a better opportunity for multi-generational wealth creation than other states because it doesn’t have an estate tax and it offers favorable laws allowing a business owner to transfer business interests into a trust. “Gifting interests in a family business to the next generation is a powerful tool, and if structured appropriately, allows for succession planning, building and protecting family wealth, avoiding probate, and reducing taxes,” he said.

What Should New Investors Know?

“What I tell my children and grandchildren is that they can still get about 4 percent in a US Treasury mutual fund,” said Blackmon. “That’s a good place to be right now. It’s fairly risk-free, and at least your money is making something. Be a little disciplined and every so often move some money from a regular bank account to a money market fund to get some interest. Then, if you have some money to invest and don’t mind a little risk, you can get into a small deal with a trust deed. One of my kids did that and they enjoy driving out and looking at their collateral.”

Byrne recommended that new investors start with a clear goal. “What are you trying to accomplish? Are you investing for retirement, a large future purchase, building wealth or simply creating a shoot-for-the-moon portfolio – one with high risk and potentially high reward? If that investment goes to zero, you have to be okay with that. Higher risk should come with a higher return, but it doesn’t always work as planned. Most people want investments that enable them to sleep at night.”

He advised new investors to think long-term and be prepared to weather the short-term ups and downs of the market. “It’s important to remember the adage: ‘Time in the market is better than timing the market,’” he said. “In the first week of April, [the stock market] had some pretty rough days. Then, with the announcement that tariffs were being delayed for 90 days, the S & P jumped seven percent, just like that. Nobody could have predicted that amount of volatility or timed it appropriately. Just start early and invest consistently, in good times and bad times. Long-term investments lead to appreciation and compound interest.”

Aguilar would advise a new investor to perform their due diligence before trusting anyone with their money. “Research who will be managing your money and guiding your investments,” he said. “Call the Secretary of State’s office to verify that they’ve been licensed. Doing the verification process will save you a lot of heartache. If the investment vehicle is complicated, get someone to explain it to you in terms you can understand, and trust your gut. If it sounds too good to be true, it isn’t [true].”

Avoiding Fraud in a Dangerous World

While there is a certain amount of risk in any investment, a very real risk is becoming a victim of a fraudulent investment scheme. Aguilar reported that in fiscal year 2023, his Securities Division received complaints of securities fraud from investors totaling more than $16 million, and in fiscal year 2024 that number was almost $10 million. Fraud cases are investigated by the Securities Division and prosecuted by the state attorney general and county district attorneys.

“We’re especially looking out for what’s called ‘pig butchering,’ which typically targets males with a social media presence,” Aguilar said. In this scheme, scammers build relationships with victims through social engineering to lure them into investing in fake opportunities or platforms, ultimately leading to financial losses. They “fatten the pig before slaughter” by getting them to make increasing monetary contributions, generally in the form of cryptocurrency, to a seemingly sound investment before the scammer disappears with the contributed monies.

“When that happens, people are often embarrassed to tell us that they’ve been the victim of investment fraud,” said Aguilar. “In addition, many of the fraudsters are located overseas and it’s hard to get jurisdiction over these individuals. What we can do is make sure the marketplace is educated about these issues so they don’t fall victim to them.” He advised investors to make sure they are dealing with a licensed advisor or a broker-dealer with a good reputation – someone who’s a part of the industry, not just a random person who contacted them online.

“Find a reputable financial advisor to guide you,” said Byrne. “Read the fine print about their fee structure and any proposed investments. Don’t be afraid of getting a second opinion.”

Blackmon advised people considering hard-money lending to ask to see an appraisal or a broker price opinion on the property. “That will give you a third-party valuation that the property is worth more than the proposed loan amount,” he said. “Be sure to go with a company with experience in real estate lending, and in my opinion, you should go with a brokerage company that uses a third-party service to collect the monthly payments from the borrowers and distributes them to the investors. Unscrupulous brokers may otherwise divert the payments to their own account and be tempted to use that money for other purposes. It’s just one more level of protection.”

Aguilar noted that, although reported losses to fraudsters total millions of dollars each year, victims of fraud often lose their entire life savings and are not compensated. Many guilty parties in securities cases do not have any money to pay court-ordered restitution to their victims. In FY 2023, investors received restitution of only $205,000 and in FY 2024 it was just over $1 million. His office is supporting a bill in the Nevada Legislature this year that aims to fill the gap between the restitution that’s owed to victims and what they actually receive. Senate Bill 76, entitled “Victim Restitution Act,” would create a fund from monies received from enforcement actions due to violations of the Nevada Securities Act (NRS 90). Nevada residents who have received an award for restitution in a criminal conviction can apply for restitution from the fund if they don’t get repaid from the fraudster.

“The main reason we are proposing this legislation is that it provides a way for Nevada residents to obtain desperately needed relief after losing what is often a significant chunk of their savings to someone who has defrauded them,” said Aguilar. “Often, victims of securities fraud are in the most vulnerable communities, especially our senior communities and others on fixed incomes.”

"Safe" is Relative

Aguilar advised potential investors to discuss the level of risk with their money manager and decide what they’re comfortable with. “100 percent safe would be putting cash in your mattress, but even then, you run the risk of theft,” he said. “Putting your money in an FDIC-insured checking or savings account is safe, but there’s the opportunity cost of giving up a chance for appreciation, and inflation may erode the value of your principal. Medium-risk may be S&P 500 stocks, and high-risk would be private-party deals or hard money investments. You should only take high risks if you have the capacity, and if it won’t change your lifestyle if you lose your investment.”

“Safe is a relative term,” agreed Byrne. “Cash in a low-yielding, FDIC-insured bank account has risks of eroding your purchasing power due to the effects of inflation.”

What's Ahead?

“Right now, we have a fairly new president and there are some unknowns about tax policy and other things,” said Blackmon. “We’re not sure if that will lead to more investments in real estate or to fewer people willing to invest. This spring, things have slowed down for us because of uncertainty on the macro level. If you’re thinking of building an $83 million building, you’d be a little nervous to start. You may want to wait a few months before investing, to see which way the wind is blowing and what interest rates will be doing. Some people say tariffs won’t cause interest rates to rise, but it seems to me that increasing costs will lead to an increase in interest rates. I’m looking forward to being proved wrong. It will be interesting to watch what’s ahead in the next six months. I still look to the US government, even with whatever issues are going on right now. It’s the best country in the world.”

Dean Byrne is the Nevada Regional Manager, Executive Vice President, and Senior Portfolio Manager with the Whittier Trust Company of Nevada.

Featured in Nevada Business Magazine. For more information on Whittier Trust's investment services and portfolio management strategies, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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May 5th

Five Key Questions to Ask Before Transitioning the Family Business

What ultra-high-net-worth individuals need to consider when mulling an exit.

In my role at Whittier Trust, I've seen firsthand how critical it is for ultra-high-net-worth individuals (UHNWIs) to have a well-thought-out exit strategy for their family businesses. Despite the intensive planning that typically goes into wealth management, recent research from the Exit Planning Institute suggests that a staggering 80% of business owners lack solid exit strategies, leaving their wealth in limbo and risking economic continuity for future generations.

The planning process of an exit strategy can often be fraught with uncertainty and potential pitfalls, making it a critical issue for business owners nearing retirement or a transfer of ownership or leadership. Here are the five key questions UHNWIs should ask their advisors to ensure a smooth and successful transition.

1. How many different exit strategies are available to me?

Understanding the various ways you can exit is fundamental to choosing the right path for your business. Each exit strategy has unique implications and suitability depending on your business's circumstances and your personal objectives. Here's a breakdown:

Generational Family Transfer

When multiple generations of a family are actively involved in the business, an owner might prioritize business legacy and family engagement over the sale price. If the objective is to keep the business in the family, the exit plan might involve transferring company stock, often at a discount, to direct heirs over many years. While keeping a majority stake in the company and control over operations, the owner can transfer assets to the next generation while still mentoring and training the next leader.

A generational family transfer can play out in a variety of ways: the owner may ultimately sell stock in the company to family, retire holding minority ownership or gift all stock to heirs. A successful transfer will take at least three to five years to accomplish, position the business for success, meet the owner's liquidity and financial needs after the transfer and leave the new owner(s) financially stable after the transaction.

Management Buyout

An owner who wants to sell all or part of the company to existing management might favor a management buyout. This type of ownership transition involves structuring a deal in which management uses the assets of the business to finance a significant portion of the purchase price. This can work for an owner who believes in the management team and thinks it will be able to keep the business thriving when he/she exits. However, if the management team lacks adequate liquidity, the seller may have to accept a lower price or unattractive deal terms, including heavy seller financing.

Sell to Partners

When the owner has partners and a quality buy-sell agreement, a sale to partners may be the only selling option. A buy-sell agreement generally articulates a controlled process for transferring ownership. Since the buyers fully understand the business and it's a planned process, selling to partners generally isn't too expensive. Common challenges in selling a business to partners include a lower sale price, slow transfer of proceeds and potential disagreements among partners.

Sell to Employees (ESOP)

When an owner wants to sell the company to its employees, an employee stock ownership plan (ESOP) might be the answer. In this type of sale, the company uses borrowed funds to acquire shares from the owner and contributes the shares to a trust on behalf of the employees. ESOPs require a securities registration exemption and are classified as an employee benefit, so it's an involved process. An ESOP sale takes many years to complete and is generally more expensive and complicated than other options. However, it can be a way to reward valued employees with company ownership. The tax savings to the seller can be substantial as well.

Sell to a Third Party

When the business is healthy and the owner wants to cash out, selling to a third party could be a good option. Whether the interested party is a strategic buyer, a financial buyer or a private equity group, the owner should expect to pay some big up-front costs to engage experienced professionals to guide the owner and company through the selling process. Having the right partners attending to the owner's interests, negotiating with the buyer and structuring deal terms are crucial to achieving the best outcomes.

Although the payoff can be attractive, third-party sales are not for the faint of heart. The process takes at least nine to twelve months and can be intense and emotional for the seller. Often, the seller retains some obligation to the business beyond the sale but has to be ready to give up control entirely. A third-party sale is ideal for an owner who is open to having the buyer bring new energy, ideas and change to the business.

Recapitalization

An owner who is open to having outside investors fund the company's balance sheet might consider bringing in a lender or equity investor to act as a partner in the business. By selling a minority or majority position, the owner can partially exit, monetize a portion of the business and reduce ownership risk in the company. New growth capital can bring more earnings to the original owner. When ready to exit the company completely, the original owner might sell the remaining shares through further recapitalization or another exit option.

Selling any portion of the company to an outsider can precipitate a loss of control and a cultural shift within the company. An owner who is not ready to be accountable to partners should consider this before opting to recapitalize.

2. How long before retirement should I begin thinking about my exit?

Ideally, business owners should start thinking about their exit strategy at least five to ten years before their intended retirement. This period allows for comprehensive planning that can influence key outcomes of the eventual sale. Value-building initiatives need time to succeed and show results before they can impact sale proceeds (valuation optimization). Identifying and grooming a successor — whether a family member, a key employee or an external buyer — is generally most effective over an extended period (succession planning). Structuring the business and the sale to maximize tax efficiency and comply with legal requirements is an involved process (legal and tax planning). Finally, strengthening the business's operations and financial health can make it more attractive to potential buyers (operational improvements).

3. What steps should I take to optimize valuation and transition?

Optimizing your business's valuation and ensuring a smooth transition involves several strategic steps. First, conduct regular financial audits to present clear and accurate financial statements; transparency is key to attracting serious buyers and securing a favorable sale price. Next, take a look at opportunities to enhance operational efficiency to demonstrate the business's profitability and growth potential. This might involve adopting new technologies, improving processes or cutting unnecessary costs. Another crucial step is to develop a strong management team that can operate independently, as a business that doesn't rely solely on the owner is more attractive to buyers. Solidifying relationships with key customers and suppliers is also important, since long-term contracts and stable relationships add value and stability to the business. Finally, ensure the business complies with all legal and regulatory requirements. Any outstanding legal issues can deter buyers or lower the sale price.

4. What if a big part of my exit is going to be a sale or a partial sale?

If you are leaning toward a sale, either partial or complete, several considerations come into play. Engaging professionals is one of the first and most crucial steps. Working with experienced legal, financial and business advisors helps owners navigate the complexities of the sale process. Those professionals can also help with due diligence. Buyers will conduct thorough examinations of every facet of your business, including financial records, legal documents and operational data. Being prepared with detailed and organized documentation can facilitate a smoother due diligence process and instill confidence in potential buyers. This preparation not only expedites the sale process but also helps in presenting your business as a well-managed and transparent entity, which can lead to a more favorable sale price.

Identifying potential buyers is also a strategic consideration that can greatly influence the sale’s success. Depending on your business's nature and industry, potential buyers could be competitors, private equity firms or even international investors. Identifying and approaching the right buyers ensures that you attract parties who see the most value in your business.

5. How should I structure sale deals?

Structuring a sale deal requires careful planning and negotiation to balance your needs with the buyer's. This involves key elements like payment terms, which can be a one-time lump sum or installments. You might even consider seller financing, which can make the deal more attractive but comes with the risk of the buyer defaulting. Another option is to structure earn-out payments tied to the business’s future performance, which can bridge valuation gaps but require clear metrics and timelines. Noncompete agreements are often requested by buyers to prevent owners from starting a competing business post-sale, so ensure the terms are reasonable and don’t unduly restrict future options.

The structure of the deal can also significantly impact your tax liabilities. Understanding the tax implications of different payment structures is crucial, as installment payments may help spread the tax liability over several years. Work with wealth management advisors to explore strategies that could mitigate your tax burden. Experienced legal counsel can help you draft and review all agreements, focusing on representations and warranties to minimize future liabilities and ensuring provisions for indemnification to protect against potential future claims or disputes.

You will also have to decide whether you'll stay involved in the business after the sale, in either a consulting capacity or a more formal role. This can ease the transition and provide additional income, but it might also limit your ability to fully step away. Don't forget to consider how the sale aligns with your personal and family goals. Reflect on how the sale proceeds will be integrated into your overall estate plan, ensuring the structure supports your legacy and philanthropic goals. Also assess how the sale structure impacts your lifestyle and plans, whether it involves retirement, new business ventures or other personal endeavors.

The transition of a family business is a complex process that requires careful planning and execution. By asking your advisors the right questions, you can ensure a smooth and successful exit that secures your legacy and financial future.

Featured in Family Business Magazine.

Written by Elizabeth Anderson, Vice President at Whittier Trust. Elizabeth is based out of the Pasadena office and focuses on family business transitions, succession planning and pre-liquidity personal planning.

For more information, start a conversation with a Whittier Trust advisor today by visiting our contact page. 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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May 1st

A Junior Board Helps Continue a Family Foundation’s Legacy

Next-gen philanthropy is about more than just giving money away.

Philanthropy is about helping others and offering invaluable funding to support communities and causes. With a family foundation, it’s also about preserving a legacy and bringing family members together in the name of a shared cause or purpose. The style and look of a family foundation varies, and it’s important to consider how to engage the next generation in all aspects of the foundation. 

Junior boards—also called associate boards—can be a powerful tool in helping prime the next generation for leadership, and they can be highly personalized in structure, style, and purpose. They can be as small as a few members, or as large as 20 or more, and the age limitations can be anywhere from pre-teen to mid-30s. These launch pads are instrumental in not only growing the foundation’s reach but also growing the junior board members as individuals.

“Junior boards help teach the next generation about the foundation and its mission, how it’s structured and more. It’s a good way to strengthen members’ financial literacy skills. It helps them learn about the value of money, investing the foundation’s assets, learning about the stock market and the power of giving with an eye on both strategy and passion,” says Jesse Ostroff, Assistant Vice President and Client Advisor for Whittier Trust’s Philanthropic Services. Junior boards can also help strengthen familial ties, prepare members to transition to the main board and help members discover more about themselves. Here’s how.

Strengthening Family Bonds 

Junior boards can help strengthen a family’s bond, especially if there are many branches or if the members aren’t particularly physically or emotionally close. “It’s a good way for cousins or more distant relatives to be able to collaborate and decide how and where the money should go,” says Ostroff, who adds that working together is helpful in making junior board members feel less alone in their giving. 

Even close-knit junior boards can deepen their relationship. Ostroff recalls one example of a small junior board that had been working together for many years. Whittier Trust facilitated an opportunity for them to share during a family retreat, where each member made a presentation on their chosen grantee organization, describing why they felt it was worthy of support and providing an overview of the diligence they had conducted on it. “It was during the pandemic so it took place over Zoom,” Ostroff noted, “but it worked really well, and the subject matter helped them develop deeper connections with each other and with the foundation Board.” One of the unanticipated outcomes was a number of cousins deciding to collaborate and support each other’s chosen organizations. “Even though you’re family, you don’t always take the time to listen and hear about each other’s interests,” he says. “This opportunity strengthened family ties in a natural, organic way.”

Facilitating Family Continuity 

Family foundations often struggle with succession plans, so establishing a well-functioning junior board can help smooth younger family members’ transition to the main board. But it also takes intentionality. “Part of our role is to get the junior board excited enough to want to devote time and attention to their philanthropy, despite the competing demands of career and family,” says Ostroff, whose team does this by showing interest in junior members as individuals, having strategic conversations with them about the change they’d like to see in the world, and accompanying them on site visits to grantee organizations so they can see first-hand the impact they’re having. 

Conversely, some junior board members are exuberant and need help focusing their interests and reining their strategies. Ostroff recalls one junior board of teenagers who were excited to be participating in their family’s philanthropy, but they hadn’t yet identified a mission and felt daunted by the responsibility to give money away. To their credit, they wanted to do it right and didn’t know where to begin. “We convened the group and used a core values game to help them to identify first the family’s core values, and then their individual values,” he says. “From there, it was easier for them to select one or two focus areas for their grantmaking, and then to drill down and choose particular nonprofits they wanted to support.” 

Inspiring Personal Growth 

Ostroff’s favorite aspect of his job is watching junior board members grow through their participation in the family’s philanthropy. “They develop life skills, such as financial literacy, respectful communication, critical thinking, and collaboration, that set them up for success in their careers and relationships.” As they begin to see the myriad benefits of aligning their family’s wealth and values, younger family members become more effective stewards of the wealth they may eventually inherit. 

Whittier Trust helps create, manage and develop junior boards, tailoring their recommendations and plans to a family’s philanthropic mission and grantmaking style, while simultaneously helping them find their own philanthropic voice. “As the next generation moves up, there will be new societal challenges, new philanthropic trends and opportunities. Millennial and Gen Z family members are coming of age in a world that is completely different from the one their grandparents inhabited,” says Ostroff. “And we’re able to provide them with the tools and support they will need to meet their moment and make their own impact.”

If you’re ready to explore how Whittier Trust’s tailored philanthropic services can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Apr 29th

Wealth Planning as a Competitive Advantage

How smart entrepreneurs future-proof their legacy.

Most entrepreneurs who have built a corporation to a valuation in the hundreds of millions (or higher) will tell you about a beginning filled with hard work, sleepless nights and worry over whether or not their business would survive. We work with many family businesses that are now worth over a billion dollars, but they all started somewhere.

Those early days are the ideal time to strategize for future success by shielding yourself and your business from unnecessary tax burdens, maximizing the impact of your legacy and creating terms that fulfill your vision. However, many of those same entrepreneurs who are so good at building a business from the ground up fail to forecast 20 or 30 years into the future. They're too focused on the now. Unfortunately, by the time a business reaches the pinnacle of its success, it may be too late to fully take advantage of the opportunities that existed early on.

That's where an experienced multifamily office comes in: they are specialists in helping individuals, entrepreneurs and families think far ahead and lay the necessary groundwork for a best-case scenario. The goal is to maximize potential returns and help “future-proof” clients' legacies, allowing them to fully enjoy the fruits of their hard work.

Easing Tax Burdens

When a company isn't worth a fortune, it's easy to forget about what might happen when its value rises. One important step is to qualify for Qualified Small Business Stock (QSBS) when the business is worth less than $50 million. Setting up a business to qualify for the QSBS isn't overly challenging. The entity must be a domestic C Corp, at least 80% of the corporation's assets must be used to conduct one or more qualified trades and originally acquired stock must be held for a minimum of five years, among other requirements. However, this process must be diligently undertaken to ensure entrepreneurs can reap the benefits down the line.

With QSBS, 100% of the gain from a sale can be excluded from federal income tax (subject to certain limitations), which can amount to a fortune if a company is sold for a high value. A number of multifamily office — and, more specifically, those with robust trust services — can both serve in an advisory capacity and handle the execution of the necessary steps (such as engaging and managing the right tax and legal professionals), allowing the entrepreneur to focus on growing the business.

Location, Location, Location

If there's any flexibility regarding where a business is located, multifamily offices can help set owners up in the most tax-advantaged position. For example, businesses located in California are subject to one of the highest corporate tax rates in the nation at 8.84%. If the income is generated by California real estate or headquartered in California, there's no way to escape that rate.

However, if the business can be headquartered in a more tax-advantaged state such as Nevada, which does not levy a corporate income tax, it might be worth considering. To help smooth the generational transition, some families utilize a trust situs in Nevada to hold their shares of the business. Nevada situs can help avoid California income taxes and California capital gains taxes (which amount to 13.3%) upon the sale of the business.

Mitigating Future Estate Taxes

If businesses grow inside a taxable estate, the government takes 40% of the value upon the owner's passing. For entrepreneurs who are building a successful corporation, it can be beneficial to allocate some shares into a trust outside of the taxable estate, where they can grow in value without being subject to the estate tax. There are a variety of trusts that allow owners to reap the benefits of the assets during their lifetimes, while shielding the estate from an onerous tax burden.

Preserving Family Harmony

Finally, it may not be obvious, but it's important to coordinate the estate plans of all family members who are involved in the business to ensure that they are aligned with the overall succession plan. The goal is to put a master plan in place that balances financial, corporate and relational goals so that the business — and the family attached to it — will thrive in perpetuity.

Start Early for Maximum Benefits

If you're reading this and your business isn't (yet) close to the multimillion-dollar threshold, it's still important to take the time to be thoughtful about how you'll set it up for future success. You may be spending your days working on improving the current bottom line, managing staff and investing in refining your product and service offerings. Still, we've seen companies quickly catapult from a few million in assets to a much higher value, so it's important not to wait. Having a go-to team of advisors who can provide both strategy and execution to file necessary paperwork, think critically about the company's financial trajectory and maximize the benefits as it grows.

Written by Brian Bissell, Senior Vice President, Client Advisor in the Orange County office of Whittier Trust.

Featured in Family Business Magazine. To learn more about how Whittier Trust can support you, your family and your legacy through our family office services, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Apr 23rd

Whittier Trust Expands Presence in Southern California with New San Diego Office

Whit Batchelor, from Whittier Trust's Newport Beach Office, is set to lead the expansion, strengthening client and community bonds within the region.

Whittier Trust is excited to announce the opening of its newest office in San Diego, reinforcing its deep commitment to serving clients in the region with a local, personalized approach. With a legacy rooted in Southern California, Whittier Trust has long advised clients and worked closely with charitable organizations based in San Diego. This expansion is a direct result of the wealth management company's continued growth in the region.

"Our decision to establish a full-time presence in the San Diego area reflects both the incredible growth we've seen here and the deep trust San Diego's most successful families have placed in us for decades," said David Dahl, President and CEO of Whittier Trust. "Our expansion into San Diego is also a reflection of our long-standing ties to the community," said David Dahl. "The Whittier family has a deep history in the region, and we are proud to strengthen our presence here, not just to better serve our clients, but to be closer to the charitable organizations and causes we have supported for years."

Whittier Trust's commitment to San Diego extends beyond wealth management, as the firm actively supports a variety of local organizations integral to the community. This includes the Helen Woodward Animal Center, which promotes animal welfare and pet adoption services; Scripps' Mericos Eye Institute and Whittier Diabetes Institute, advancing medical research and patient care; the San Diego-Imperial Council of the Boy Scouts of America, fostering leadership and service among youth; and the University of San Diego, where Whittier Trust contributes to higher education and leadership development initiatives.

Leading the new San Diego office is Whit Batchelor, newly appointed Executive Vice President, Client Advisor and San Diego Regional Manager. A longtime leader in Whittier Trust's Newport Beach office known for his dedication and accessibility to clients, Batchelor has worked extensively with ultra-high-net-worth individuals and families in San Diego, crafting tailor-made, multi-generational wealth management strategies. His leadership ensures a seamless transition for existing clients while setting the stage for further growth in the region.

"With this new office in San Diego, I am eager to build upon the legacy of trust, integrity and boutique service that Whittier Trust has cultivated for generations," said Batchelor. "I look forward to expanding our connections within the community, enhancing our ability to serve clients locally with tailored financial strategies and contributing to the vibrant culture of San Diego."

Complimenting this milestone of growth, this year also marks the 25th anniversary of Whittier Trust's Seattle Office. The firm also recently opened offices in Menlo Park and West Los Angeles and relocated its headquarters to a larger space in Pasadena to accommodate an increasing number of experienced professionals dedicated to serving a growing client base. As Whittier Trust continues to grow, its focus remains on providing the highest level of personalized service through a relationship-driven, client-first approach.

The office will be located at: 12770 El Camino Real, Ste 120, San Diego, CA 92130, twenty miles north of Downtown San Diego in Del Mar.

For more information about Whittier Trust's wealth management, estate planning and family office services, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Apr 17th

Balancing Support and Accountability

How high-net-worth families can protect their legacy while supporting their heirs.

Every parent dreams that our children will grow up to be happy, productive, contributing members of society. We envision a path that may include youth sports, music and the arts, faith and culture, and of course, education. Our fervent hope is that our efforts to provide the best possible resources to our children will result in highly functioning adults who love us and share our values of family and community. Still, despite the best parenting efforts, highly functioning adults don’t always happen.

Some children come into the world with special needs. Others experience developmental delays or challenges. Still others make it to teen or young adult years relatively unscathed only to experience mental or emotional difficulties, or perhaps even substance abuse, later in life. It is part of the human experience to go through struggles in life and family; financial status is not a guarantee of better outcomes. What is a family to do then, when planning for a multi-generational wealth transfer amid the specter of children (or grandchildren) who are currently incapable of being good stewards of wealth? How does a family plan around a child with severe emotional limitations or addictions?

Where there are obvious physical and developmental difficulties that will require lifetime care and consideration, estate planners frequently suggest “special needs” trusts designed to provide maximum flexibility to support the beneficiary as their needs change throughout life. Far more challenging, however, are situations where alcohol and drug addiction present ongoing issues.

Of course, a family member with substance abuse issues is disruptive on many levels. For parents or grandparents who are planning to transfer assets to younger generations, addiction presents an extra element of complexity. Even if there are not any current issues among family members, we hear from clients all the time that they want to protect their heirs from harm in the event addiction presents itself in the future. Finally, the addict may not be a direct descendent but the spouse or partner of one of our children.

It is well known that irrevocable trusts can be an effective tool in protecting assets from creditors. They are also effective in protecting beneficiaries from their own worst impulses. Since creditors cannot generally reach the assets of the trust, the beneficiary may not use the assets as collateral for a loan. The trustee usually has the power to make distributions on behalf of the beneficiary so funds may be made available for treatment centers and other rehabilitative services. If a family is concerned about the trustee having the power over distributions, they can name a special distribution trustee for this purpose. This allows for professional management and administration of the assets while placing a trusted family member or family friend in the position of making discretionary distribution
decisions.

An alternative (or additional) solution could be to make gifts of limited interests in family entities. For example, a limited partnership interest carries with it an ownership stake but typically no management interest nor the ability to compel distributions. Buy/sell agreements among the partners can help ensure that the ownership stays in the family.

When thinking about how to make funds available for the benefit of a family member with addiction issues, it is important to understand that treatment options are typically quite expensive and insurance may be limited, particularly for residential treatment facilities. Also, it is not unusual for an addict to cycle in and out of treatment and sobriety, requiring multiple stays. Sometimes families will hire a “sober living companion” to live with the individual, and take them to therapy and treatment appointments and even 12-step meetings, if those are part of the recovery plan. The people who provide this service are frequently in recovery themselves and have practical experience navigating different situations. Keep in mind that there is no certifying or accrediting agency to provide credentials for these companions so careful monitoring is appropriate.

The trustee with the power to make distributions for the benefit of the family member will need to take these factors into account when making decisions. It’s not an easy task and there is a high degree of uncertainty. This should be expected, so leniency and flexibility towards the decisions of the trustee should be built into the trust documents. Perhaps the most important job of the distribution trustee is to try and prevent additional harm by making direct distributions to a beneficiary who is under the influence or who is experiencing a particular episode of struggle.

These types of concerns arise in situations outside of clinical addiction. Sometimes it’s not substance abuse but some other kind of distress such as cults or psychologically abusive spouses and partners. In these scenarios, providing a trustee with the discretion to do what they think is in the best interests of the beneficiary is critical. Drafting a trust instrument with highly restrictive provisions, while tempting, may undermine the trustee’s ability to provide resources and care for the intended beneficiary.

These are not happy things to think about, and they certainly are not our minds as we spend sleepless nights with newborns and toddlers. Yet we all know the reality of the world we live in. Even if our own families are not facing these situations, we know of others who do. Careful planning and consideration of all the factors is an important part of safeguarding a family’s legacy for multiple generations.

At Whittier Trust, our experience in serving as a trustee and dealing firsthand with beneficiaries who are suffering from addiction and other behavioral issues has provided us with tremendous knowledge that informs how we advise clients in the planning stage. 

To learn more about how Whittier Trust can make a difference for you and your loved ones, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Apr 11th

Partners In Portfolio Strategy

Three key questions to strengthen your investment strategy.

At its core, investing is straightforward: Buy low, sell high. But additional factors such as taxes, along with your risk tolerance and asset mix, can significantly impact your returns. Three key questions can help ensure your investment strategy is positioned to maximize your long-term after-tax returns and legacy goals.

1) Is your wealth concentrated in just one or two businesses, asset classes, or stocks? 

At Whittier Trust, new clients frequently come to us having created significant wealth through a single asset—perhaps their own company or stock from an employer. As the oldest multi-family office headquartered on the West Coast, we have seen this position time and time again. But that doesn’t mean that we respond in the same way each time.

“Conventional wisdom tells us that reducing the concentration and diversifying the proceeds is the appropriate way to mitigate an investor’s risk,” says Nick Momyer, Senior Portfolio Manager at Whittier Trust. “But while that may work for one client, it could be all wrong for another.”

At Whittier, we never take a one-size-fits-all approach. “The first step,” Momyer explains, “is to leverage our expertise as fundamental investors to gain a foundational understanding of your assets.”  

The Whittier investment team will study the tax characteristics of your holdings and factor in the exposures that inform potential risk and return. “Then, armed with this deep knowledge, we craft personalized portfolios comprised of uncorrelated assets, minimizing the overlap with your existing holdings,” Momyer says. 

This complementary method delivers tax efficiency and enhanced downside protection, safeguarding your wealth. 

2) Is your investment portfolio tailored specifically for you? Or do you sometimes feel you’re just another account number to your wealth manager? 

At Whittier Trust, we believe our clients deserve a more calibrated approach that can significantly improve the compounding power of your portfolio: the use of individual securities for tax-efficient wealth management. Unlike mutual funds, individual securities offer granular control over your portfolio, selecting each holding with detailed knowledge of its track record, integrity, and growth potential. 

“Our client-centric approach starts with your objectives,” Momyer says, “which guide our management of a customized portfolio, tailored specifically for your unique needs and desired outcomes. This gives us great advantages for capital gains management and tax-loss harvesting. We can identify assets to complement and diversify a legacy portfolio of concentrated positions, then manage capital gains on a security-by-security basis. This allows us to potentially defer, transfer, or even avoid capital gains taxes through calculated selling and tax-efficient gifting strategies.”

The market will always have ups and downs, and at Whittier, we use these fluctuations to your advantage. By strategically harvesting tax losses on underperforming stocks, the Whittier team offsets taxable gains from other investments, reducing your tax bill and freeing up capital for reinvestment. “Think of it as tax alpha,” Momyer says, “Actively using tax-efficient strategies to boost your after-tax investment returns.”

These stratagems are particularly beneficial for ultra-high-net-worth clients with complex portfolios that include concentrated and highly appreciated assets. Individual securities allow us to navigate these situations effectively, minimizing tax drag and preserving more of your wealth to compound over time.

“One recent example was a client who inherited a concentrated technology holding with a looming tax burden,” Momyer recounts. “We saw an opportunity for a multi-pronged approach. By expertly harvesting tax losses elsewhere in their portfolio and leveraging the client’s donor advised fund, we reduced their tax liability, diversified their portfolio, and honored their charitable wishes.”

3) Are your investments aligned with your long-term financial and legacy goals?

Many investors focus on growing their wealth but may not have a clear roadmap for sustaining it over generations. At Whittier Trust, we integrate portfolio strategy with estate planning, philanthropy, and wealth transfer goals.

“Our approach goes beyond returns. We help clients structure their investments to support their broader objectives, whether that’s leaving a legacy for their family, supporting causes they care about, or simply enjoying financial freedom,” Momyer says. “By considering factors like trust structures, estate planning, and tax implications, we help ensure your portfolio works in concert with your long-term vision.”

At Whittier Trust, we take a holistic approach to wealth management, ensuring that your investments align with your evolving financial needs and legacy aspirations. By combining deep investment expertise with thoughtful estate and tax planning, we help clients not only grow their wealth but also secure their financial legacy with confidence and purpose.

Getting Started

At Whittier Trust, our history and experience become your advantage, directing you to the strongest market performers while making sure taxes don’t erode your wealth. Once our investment team gains a clear understanding of what matters most to you, we craft a customized, efficient portfolio of individual securities, to maximize your after-tax return and meet your objectives. You gain greater control with less effort and stress, knowing you can rely on your fiduciary advisor and family-office investment team to act in your best interests. We invite you to contact Whittier Trust today and discover how we can help you not only achieve your personal and financial goals, but perhaps surpass them.

If you’re ready to explore how Whittier Trust’s tailored investment strategies can work for you, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Apr 3rd

Whittier Trust Names Whit Batchelor the Head of New San Diego Office

Bringing Decades of Wealth Management Expertise to San Diego’s Ultra-High-Net-Worth Families

Whittier Trust is pleased to announce that Whit Batchelor has been appointed as Executive Vice President, Client Advisor and San Diego Regional Manager, where he will lead the firm’s newest office in San Diego. This appointment underscores Whittier Trust’s dedication to internal leadership development and its commitment to maintaining a client-first culture and relationships spanning generations through experienced, long-tenured professionals.

“Whit’s deep expertise, strong relationships and dedication to client service make him the ideal leader for our official expansion into San Diego,” said David Dahl, President and CEO of Whittier Trust. “Having been with Whittier Trust since 2011, Whit has played a pivotal role in guiding our clients in Southern California. His time as part of the leadership in Newport Beach, coupled with his strong community involvement and extensive work already with clients in San Diego, ensures a seamless transition as we further grow our presence in the region to continue serving our clients locally.”

During his tenure at Whittier Trust’s Newport Beach office, Batchelor spent more than a decade expertly navigating the complex financial landscapes of high-net-worth individuals and families, crafting personalized, multi-generational strategies that align with each family's distinct goals and values. His expertise spans wealth and investment management, estate planning, tax optimization, balance sheet management and comprehensive financial advisory services, essential for a premier multi-family office. Known for his dedication and accessibility, Batchelor cultivated lasting relationships with clients and their families, ensuring continuity and a bespoke approach to financial services. His deep familiarity with the San Diego market, forged through years of building relationships and advising families in the area, further positions him uniquely for this role.

In addition to his expertise in wealth and investment management, estate planning and tax optimization, Batchelor has been an active participant in community initiatives throughout Southern California. While in Newport Beach, he was deeply engaged in service projects and philanthropic efforts, including his tenure on the board of Make-A-Wish Orange County & the Inland Empire, where he served as board chair. He brings this same spirit of community involvement and service to San Diego, where he envisions the office playing an integral role in both client service and regional philanthropy.

Whit Batchelor holds an undergraduate degree from the University of Vermont and an MBA with a finance concentration from California Lutheran University. He is a Certified Trust and Financial Advisor (CTFA) and a Certified Financial Planner (CFP). Outside of work, he enjoys spending time with his wife and three children, pursuing outdoor activities such as sailing, skiing and mountain biking.

As Whittier Trust officially opens this new office in San Diego, the wealth management firm remains committed to its tradition of thoughtful leadership selection, ensuring that every client continues to receive the personalized and sophisticated wealth management services that define the Whittier Trust experience.

For more information about Whittier Trust, start a conversation with an advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Mar 26th

Whittier Trust CIO, Sandip Bhagat, Featured on NASDAQ TradeTalks Panel 

Sandip engaged in a healthy debate with top industry professionals and economists about the recent turmoil in the markets as a growth scare threatens to devolve into a recession or stagflation.

Risk assets have sold off in the midst of high policy uncertainty and fiscal austerity from government job cuts. In the span of just a few weeks, concerns about the U.S. economy have shifted from being overheated to now plunging into a recession.

Sandip believes these fears are overblown and unwarranted. The bark of tariffs will likely be bigger than the bite. Renewed fiscal stimulus, deregulation and productivity growth will eventually push growth higher in the coming years.

Watch now to hear Sandip’s more balanced, strategic and constructive outlook in a discussion with Phil Mackintosh, Chief Economist at Nasdaq; Brian Joyce, Managing Director on the Nasdaq Market Intelligence Desk; Steven Wieting, Chief Economist & Chief Investment Strategist at Citi Wealth; and host of Nasdaq Trade Talks, Jill Malandrino.

YouTube video

To learn more about our views on the market or to speak with an advisor about our services, visit our Contact Page.

Mar 24th

Whittier Trust Promotes Mathew N.S. Neben and Charlie R. Normandin

Whittier Trust Strengthens Client Service Excellence Within Reno and San Francisco Offices Through Advancement of Distinguished Internal Talent.

Whittier Trust is pleased to announce the promotions of Mathew N.S. Neben to Senior Vice President, Portfolio Manager, and Charlie R. Normandin to Vice President, Client Advisor. These advancements reflect Whittier Trust’s continued commitment to finding and developing top-tier talent and its dedication to providing personalized, relationship-driven wealth management services.

“Charlie and Mat exemplify Whittier Trust’s core values—deep expertise, a client-first mindset, and an unwavering commitment to excellence,” said David Dahl, President and CEO of Whittier Trust. “Charlie’s meticulous approach to fiduciary and financial planning and Mat’s leadership in investment strategy reinforce our mission to deliver highly personalized, long-term wealth solutions.”

Mathew Neben has been elevated to Senior Vice President, Portfolio Manager in Whittier Trust’s Reno office. With over a decade at the firm, Mat manages equity, fixed income, and alternative assets for high-net-worth individuals and foundations. As a member of Whittier Trust’s Investment Committee, he helps shape the firm’s overall investment strategy and conducts in-depth analysis of companies in the Communication Services sector. In his new role, he will continue to refine Whittier Trust’s investment approach while deepening client relationships through customized portfolio management.

Charlie Normandin steps into the position of Vice President, Client Advisor in Whittier Trust’s San Francisco office. Since joining the firm in 2020, Charlie has been instrumental in providing tailored family office services, fiduciary guidance, and financial planning for high-net-worth clients. His keen attention to detail allows him to craft optimal solutions to complex wealth management challenges. In his expanded role, Charlie will continue to deliver strategic financial advice while strengthening Whittier Trust’s client service capabilities in the San Francisco Bay Area.

Beyond their professional achievements, both Mat and Charlie are dedicated to their local communities. Mat serves on the Board of Directors of the Boys & Girls Club of Truckee Meadows, supporting youth development initiatives in Northern Nevada. Charlie is an active member of the San Francisco Estate Planning Council and a passionate advocate for youth organizations, including the Boys & Girls Club. 

Whittier Trust views its employees as the foundation of the firm’s success. By fostering a culture of leadership, collaboration, and mentorship, the wealth management company enables team members to grow both personally and professionally. With diverse experiences and expertise, each team member brings fresh insights and innovative solutions that enhance the client experience. Through ongoing knowledge sharing and professional development, Whittier Trust empowers its advisors and portfolio managers in each office to deliver exceptional service, providing clients with local strategic guidance and personalized wealth solutions to preserve and grow their assets for generations.

For more information about Whittier Trust, start a conversation with an advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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