Family stock images have a variety of uses. They can be used for personal or commercial purposes. Social movements, such as women’s empowerment, have also influenced family stock images. For example, contemporary stock photography aims to show how women with disabilities are integrated into family units. Another example is the rise of photo agencies that offer artistic and non-stock images.
Among children who may want to hold some stock in the business, the majority should go to the child who will be the leader of the business. The remaining stock can be shared among other children according to their roles within the company. A larger role carries greater responsibility and a higher percentage of the stock. This will also limit the potential for collusion or “blocking.”
If you plan to gift shares of stock to a child, you should first transfer the shares to that individual’s brokerage account. There are various brokerage accounts available for this purpose. You can use those offered by E-Trade, Schwab, or Fidelity. If the giftee already has a brokerage account, it may speed up the transfer process.
Another way to transfer family shares is through an ESOP. This type of investment structure allows the family to retain control of the business, and gives family members a tax break on the value of their company’s stock. A typical ESOP requires a company to have at least 30 percent of its shares in qualified securities. This can be a complex process, and may cost as much as $20,000 or more. However, if you have a company that meets these criteria, it may be worth pursuing.
Leveraged recapitalizations are another way to increase the value of your company. They allow you to reinvest the proceeds tax-free. However, they do increase the risks associated with running the business. This was a popular Wall Street trend during the 1980s. Leveraged recapitalizations are now possible in a variety of sizes, and the process involves changing the capital structure of a company as well as transferring existing family shares.
A clearinghouse will be needed if the company has a large number of shareholders. For example, a manufacturing company in New Jersey had more than a dozen cousins in other states, and they all agreed to notify the corporate secretary of their interest in the company. The clearinghouse needs to be able to facilitate transactions between buyers and sellers.
Another risk associated with profit sharing stocks is conflict. When family members have the power to make decisions and decide on the company’s strategy, they may not always share the same vision. For example, greedy family members who are part of the decision-making process may try to raise their own stock ownership. Such actions may lead to a conflict of interest in the company. Therefore, a profit sharing stock program may result in a large amount of stock being sold.
