By Kent Phelps, Attorney
When Harry and Esther Snyder opened the first In-N-Out Burger in Baldwin Park, CA in 1948, their vision was to make this business a “golden goose” for the Snyder family. For the last 62 years, the Snyders have resisted countless lucrative offers from venture capital firms and corporate conglomerates to swoop up this cash cow. Despite the deaths of Harry, Esther, and their only children, Rich and Guy, the business remains a closely held family company.
Lesson #2: The Power of Dynasty In Business Estate Planning
In 1989, Esther Snyder established the Esther L. Snyder Trust (Harry died in 1976). This was an irrevocable trust into which she gifted the majority of In-N-Out stock “to make provision for my two sons and other lineal descendants, including my granddaughter, Lynsi.” Her intent in establishing the trust was “to enable the stock ownership of my closely held corporation to be transferred from one generation to the next such that the business of the corporation could continue to grow and prosper.”
Esther’s trust accomplished two major objectives.
First, all the future appreciation of the In-N-Out stock gifted occurred outside Esther’s taxable estate. This move alone saved Esther’s estate literally tens of millions of dollars in estate taxes on her death.
Second, it allowed the company to continue on in perpetuity in the Snyder bloodline. In our last post we told you about the tragic and untimely deaths of Rich and Guy. The company is now in the third generation, in the hands of a young mother of twins, and prospering like never before. The last post focused on the reasons for this – how the Snyders established business systems to ensure the In-N-Out structure was stronger than the individuals involved so the company could thrive beyond the retirement or death of the founders. That’s great for the company but it doesn’t guarantee the company stays in your family when somebody dies. That’s where dynasty planning comes into play.
A common myth in estate planning is that all trusts are created equal. Most trusts prospective clients ask us to review do not do what Esther Snyders trust can do: perpetuate your company and wealth for multiple generations of lineal descendants; protect your company and wealth from your descendants’ divorces, lawsuits, bankruptcies, addictions, or other life crisis events; ensure that your personal values are passed to your descendants along with your wealth.
Can your trust do what Esther Snyder’s trust is doing? If you are unsure, let us provide you with a complimentary review of your existing trust and we will tell you. Email it to ken[email protected] or just call 480.324.8000 for an appointment.