Key Factors in Succession Planning
When you are succession planning, there are many options to consider for your family.
The best option will depend on a number of factors:
- The existing structure that holds the wealth for the senior generation.
- The wishes of the senior generation and the timing of the transfer.
- What the assets are and how any debt is financed.
- If operational businesses are involved, how the leadership roles should be filled.
- The family context and the dynamics at play.
It is crucial for your advisors to understand these factors, and have the experience to know how they can impact the path for the transfer of wealth.
The guidance of a trusted advisor can give you assurance and peace of mind that every eventuality has been accounted for.
Structuring the Transfer of Wealth
The transfer of wealth can take place by operation of the will of the last surviving senior member of the family. Wills remain essential legal documents and can effectively pass wealth that is personally-owned to the next generation, on the terms specified.
More complex arrangements may involve a mixture of the following;
- Personally held assets
- Assets held in trusts established by the senior generation in which the senior generation has roles (such as trustee or having the power of appointment and removal of trustees).
- Corporate structures, with directorships and leadership roles being held by the senior generation.
- A blended family context and the trusts involved could have different classes of beneficiaries.
In such scenarios, the path to achieve the intended outcome may include:
- Mechanisms for the passage of personally held wealth.
- Review of the trust structures to ensure that the trusts remain fit for purpose in your circumstances.
- Mechanisms for the timely transfer of trusteeships and the power to appoint and remove trustees.
- Formalising guidance from the senior generation as to whether existing trusts should be resettled or distributed after their deaths, to divide the trust assets, or whether keeping the assets “intact” is of importance to them.
- Review of whether the assets are held in the right place to be transferred according to the mechanisms that are put in place.
- Consideration and planning for the transfer of roles within any family business.
- Consideration of whether the arrangements are reasonable in the family context and the extent to which consultation is appropriate, with a view to minimising the risk of any challenges.
Our Private Wealth Team have the experience and depth of skill to ensure the optimal path for succession and protection of your family’s legacy.