Staff ManagementThe Care & Keeping of Your Principal’s Estate

© 2015 INGUARD®

TABLE OF CONTENTS

Introduction: How to Hire for High Net Worth Estates ……………..….. 2

Chapter 1: Staff the Principal Home Appropriately …………………….. 3

Chapter 2: How to Recruit Domestic Personnel ………………………… 7

Chapter 3: Legal & Tax Considerations …………………………………. 16

Chapter 4: Risk Management Best Practices …………………………… 22

Conclusion ………………………………………………………………..… 27

The Care & Keeping of Your Principal’s EstateINTRO | PAGE 1

Operating a fully functional estate requires more than an estate or business manager at the helm. It often demands a network of domestic workers, landscapers and groundskeepers, drivers, child care providers and more to keep a household running smoothly. !The staffing and management of a household is a weighty task, with employees often being one of the biggest—and more overlooked—risks for high net worth individuals. Responsible estate management should take into account the principal’s needs in regard to hiring, human resources and risk management, employing best practices and due diligence in all areas. The principal and employees deserve a fully professional experience from first to last day on the job. !In short, it’s time to run your employer’s home like a business. Here’s how….

INTRODUCTION | How to Hire for High Net Worth Estates

INTRO | PAGE 2

Chapter 1Staff the Principal Home Appropriately

According to estate manager-turned-household advisory specialist Teresa Leigh, there are 50 generally recognized household titles. These household management roles, which range from cleaning and child care, to interior design and accounting, must either be staffed or outsourced to a vendor. !It is the estate or business manager’s responsibility to determine the extent of services necessary, and which positions should be brought in-house. For example, the principal may wish to have a permanent groundskeeper, but depending on the number and size of held properties, and available budget, it may be more cost-effective to outsource the work to a landscaping firm.

CHAPTER 1 | PAGE 4

Staff the Principal Home Appropriately

Build a Household Organizational Chart !A household’s organizational chart can vary widely based on the size and complexity of the estate. Positions may be as broad as “executive housekeeper” or as narrow as “ironer.” Consider for each area of responsibility: !

Approximately how many hours are needed each week? Is this an ongoing need, or a seasonal one? What is the estate’s staffing budget? What is a competitive salary for this position? Vendor rates?

CHAPTER 1 | PAGE 5

Use a spreadsheet, like the one below, to determine the appropriate household positions. Based on the weekly hours needed, see if multiple needs can be combined into a “generalist” household position. !Once completed, research compensation levels commensurate with each position and predefined staffing budget. Also consider the added responsibility of any salaried positions. In Chapter 3, we outline the legal and tax requirements for household employees.

Need Est. Weekly Hours Seasonal? Notes

Lawn and groundskeeping services

5 No May be best to outsource; research local vendors

CHAPTER 1 | PAGE 6

Chapter 2How to Recruit Domestic Personnel

After you determine the needed roles for the household, you can begin to recruit personnel and research vendors for outsourced needs. One of the biggest mistakes high net worth and celebrity employers make is to hire assistants, drivers or other positions based on familiarity or friendship rather than merit. !If the estate or business manager (an objective third party) is given the responsibility of hiring and staff management, it places a buffer between the principal and friends or family looking for a job, and ensures properly vetted and qualified candidates are hired.

How to Recruit Domestic Personnel

CHAPTER 2 | PAGE 8

The Importance of Job Descriptions !When you are ready to hire, draft job descriptions for each position. Create individualized, documented job descriptions that will help you in several ways: !

Attract qualified candidates Align desired roles with the principal’s expectations Outline job expectations, for later use in management and

performance evaluations Provide a reference for compensation and hiring decisions

How to Recruit Domestic Personnel

CHAPTER 2 | PAGE 9

Additionally, job descriptions might include: !

Location where the work will be performed Equipment, educational/training or certification requirements Salary range or other description of compensation and benefits package

!

Job descriptions should be specific, action-oriented and tailored to each position. They typically include: !

Job title Job objective Summary of the general nature of the job Description of area(s) of responsibility List of duties or tasks critical to success

!

CHAPTER 2 | PAGE 10

Related Resources: Writing Effective Job Descriptions Think Before You Hire: Maintain a

Legal Hiring Process

Pros and Cons of Placement Firms !Some estate managers turn to domestic staffing or placement firms to recruit candidates. Placement firms save you time and allow you to rely on their network and expertise, but their fees might cut into your budget for compensation packages.

How to Recruit Domestic Personnel

Pros Cons

Reduce time and effort spent on recruiting and vetting.

Additional fees for services.

Establish an objective third-party to evaluate candidates, ensuring hires are based on merit and not personal relationships.

May place restrictions or standards for staff management or compensation.

Quickly fill roles by sourcing from a pool of pre-screened candidates.

Outsource recruiting and vetting to human resource professionals.

Screen Candidates: The Pre-Interview Process !All hires should follow a standard hiring process. As a best practice, include the following conditional employment practices: !

Background check: Run a thorough background check for: ○ Address verification ○ Criminal history, sex offender check ○ DMV status report ○ Drug testing ○ Immigration status check ○ Search of all previous aliases ○ Social Security verification ○ Verification of prior employment

How to Recruit Domestic Personnel

CHAPTER 2 | PAGE 12

!Nondisclosure agreement (NDA): Depending on the principal and

nature of the work, at some point in the interviewing or hiring process, every person you hire should sign a nondisclosure agreement to guarantee discretion.

Reference check: Confirm each candidate’s qualifications and character by checking with submitted references.

Resume: Review prior work history, experience, education and other qualifications.

CHAPTER 2 | PAGE 13

Screen Candidates: The Pre-Interview Process (cont.)

!Pre-employment physical: Confirm the candidate is capable of

performing all job duties. A thorough health assessment can also protect the employer from fraudulent or avoidable workers’ compensation injuries, in the case of a pre-existing injury or health condition.

Workers’ compensation screening: Investigate whether candidate has any past history of workers’ compensation claims or fraud.

Additional vetting: Look into candidate’s background for red flags, such as past lawsuits or issues with former employers. Confirm candidate has job-specific requirements (i.e. a valid driver’s license and car insurance for a driver; CPR certification for a caretaker).

CHAPTER 2 | PAGE 14

Screen Candidates: The Pre-Interview Process (cont.)

When should they sign an NDA? !All hires should sign a nondisclosure agreement in order to guarantee discretion throughout their employment. But when to require this during the hiring process depends on the status of the principal, the nature of the job and your relationship with the candidate. !If the principal has a very high status or greatly respects his/her privacy, or if discussing the job requires disclosure of highly sensitive information, a signed NDA might be a requirement prior to the interview. However, if job details are not confidential, or if you know a candidate well enough to trust his/her discretion, an NDA might not be necessary until an employment offer is made. When in doubt, exercise caution. !

Chapter 3Legal & Tax Considerations

If the household is a business, the estate manager is its CEO. You must protect the principal’s legal and financial standing by adhering to all statutory employer requirements. !Note: Consult the appropriate legal and tax professionals to ensure your practices are compliant with state and federal legislation and union regulations.

!Employee Payroll Taxes Required by Law !Statutory payroll taxes must be withheld from an employee's paycheck. Employers must submit the following: !● Federal income tax withholding ● Social Security tax withholding ● Medicare tax withholding ● State income tax withholding ● Local tax withholdings (i.e. city, county or school district

taxes, state disability or unemployment insurance)

CHAPTER 3 | PAGE 17

Voluntary payroll deductions, which may be withheld from an employee's paycheck if the employee has agreed to the deduction, may include: !● Health insurance premiums (medical, dental, vision) ● Life insurance premiums ● Retirement plan contributions (such as a 401(k) plan)

!Employer Payroll Taxes Required by Law !The employer is also responsible for paying a portion of payroll taxes beyond the expense of an employee's gross pay. The employer’s portion of payroll taxes includes: !● Social Security taxes ● Medicare taxes ● Federal unemployment taxes ● State unemployment taxes ● FICA taxes

Once paychecks have been issued, the employer is responsible for: !● Paying the employer's share of payroll taxes ● Depositing withheld tax dollars in a timely manner ● Preparing reconciliation reports ● Reporting payroll tax obligations and expenses ● Filing payroll tax returns

!Payroll tax reporting requirements include: !● Making federal tax deposits ● Annual federal unemployment tax return (Form 940 or 940EZ) ● Employer's quarterly payroll tax return (Form 941) ● Annual Return of Withheld Federal Income Tax (Form 945) ● Wage and Tax Statements (Form W-2)

Additional Employer Tax Responsibilities

CHAPTER 3 | PAGE 19

CHAPTER 3 | PAGE 20

Insurance Policies Required by Law: !● Disability insurance: Some states require that employers provide

partial wage replacement insurance coverage in the event of non-work-related illness or injury.

!● Unemployment insurance: Most employers are required to pay a

federal and state unemployment insurance tax. !● Workers’ compensation insurance: Workers' compensation

insurance provides medical coverage and partial wage replacement in the event of work-related illness or injury. Workers' compensation requirements are mandated by state legislature.

! Note: If employees cross state lines, or travel as part of their job requirements, you

may need to modify their insurance accordingly.

CHAPTER 3 | PAGE 21

Employer Tax Resources ● Small Business Forms and Publications ● Independent Contractor (Self-Employed) or Employee? ● Employment Tax Due Dates ● Depositing and Reporting Employment Taxes !

Employee Tax Resources ● Insurance Requirements for Employers ● Federal Unemployment Tax

Chapter 4Risk Management Best Practices

High net worth individuals are more likely to be the primary target of a lawsuit due to the additional attention drawn to their deep pockets and public prominence. Employees are possibly the biggest, and the most overlooked, risk for high net worth and celebrity individuals. !Risk management is a comprehensive and proactive approach to identifying, and offsetting, liability and risk. This chapter addresses best practices in domestic personnel risk management.

Risk Management Best Practices for Estates

CHAPTER 4 | PAGE 23

Risk Management Best Practices for Estates● Vet all employees. Hiring friends is one of the biggest mistakes made,

because it often does not take the individual’s qualifications into account. Additionally, blurring the lines between friends and family, or employer and employee, makes it difficult to manage the relationship in a professional manner. Personal assistants, drivers, nannies, household employees, cleaning staff and all other hires should be properly vetted via a standard hiring procedure.

!● Create a professional workplace. When estate managers run a household

like a business, it creates an expectation of professionalism on the parts of the employer and the employee. All positions should have a formal contract in place and employee guidelines. The contract outlines job-specific roles, responsibilities and expectations. This document can be used later in performance and compensation conversations, or referenced in the event of an unfair termination lawsuit.

CHAPTER 4 | PAGE 24

CHAPTER 3 | PAGE 18

● Demand discretion. For the protection and privacy of the principal, all new hires must sign an NDA and confidentiality agreement.

!● Secure adequate coverage. This includes legally required

policies such as workers’ compensation, and other insurance best practices, including employer’s liability and employment practices liability. Make sure the employment practices liability policy is set to an adequate limit (at a minimum of $1 million).

!An experienced risk management professional can help you identify exposures, secure appropriate insurance coverage, and consult on employee management best practices.

CHAPTER 4 | PAGE 25

Risk Management Best Practices for Estates

What is Risk Management? !Risk management strategy begins with risk identification. Clients and their counselors might identify risks with the help of checklists, in-depth interviews, site visits, asset inventories, activity logs and other research. !Once identified, risks can be prioritized based on potential severity and relative likelihood of harming the principal personally or financially. Then, solutions can be considered, and a risk management program executed. !In short, risk management is more comprehensive than insurance, and is tailored to the unique lifestyle and liabilities of the client.

Wealth and fame bring both privilege, as well as responsibility. Protect your employer by following employment and human resources best practices. When specialized guidance is needed, high net worth risk management can help preserve and perpetuate their livelihood. INGUARD consultants develop tailored risk management programs for celebrities and high net worth individuals and families, to protect and preserve wealth. Our risk management consultants work with you and your client to develop an appropriate, responsible risk management strategy. We provide guidance and consultation on potential vulnerabilities, legal and regulatory requirements, and risk management best practices. If you’d like to learn more, contact INGUARD to schedule an initial consultation.

CONCLUSION | PAGE 27

CONCLUSION | The Care & Keep of Your Principal’s Estate

Previously Beauchamp McSpadden | Morrison Galliher, INGUARD is an insurance and risk management firm headquartered in Wabash, Indiana, providing holistic insurance and risk management consulting services to individuals, families and businesses. INGUARD specializes in niche markets and portfolios with complex needs, including celebrities and high net worth individuals and families. INGUARD provides personalized financial and insurance consulting services to illuminate areas of risk. Learn more about INGUARD at www.INGUARD.com.

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