Procrastination, the destroyer – how to stop it and plan your succession properly

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If proper planning and documentation are not in place, life becomes much harder.  It’s the type of thing that can break a family and destroy a successful business. 

Nobody is immortal, and we don’t know when our time will be up or when life can change drastically. It’s not only death that needs to be planned for - in fact, incapacity can sometimes be worse, as everyone is stuck in limbo and if all power vests with the incapacitated patriarch or matriarch, there is little those around them can do to keep the wheels turning. 

In my whole career I don’t believe I have ever met a client who has everything in place and frighteningly many have nothing at all. Millions in the bank, properties and luxury assets everywhere, but no proper planning for what should happen when they are no longer around.

Families need to stop hitting the snooze button. This may sound like the voice of doom, but it’s reality. Not listening to the wake-up call could subject your family, your employees and business partners to a very uncertain future. Here’s another truth; thinking about it doesn’t make it happen. So let’s cut through the superstitions and protect the fortune you worked so hard to make.  

There are numerous cases where no planning was in place or when improper planning was used. 

One good example is the recent and well-publicised case of the dispute over the validity of Aretha’s Franklins two wills. 

In the end it was upheld that a later, hand written will trumped an earlier formally documented set of wishes. Whilst this might be a victory for one side of the family, in reality it is a loss for all. The fallout from the dispute and the legal battle that entailed will be felt by both sides of the family for many years and is likely to have caused irreparable damage.  

This scenario could have been avoided by earlier discussions and formally rejecting the first will. It would have saved a lot of time, money and, more importantly, anguish.  

Early thoughts, discussions and appropriate documentation are vital. It isn’t easy, and with multi-generational family businesses, this can be difficult as it can be with various branches of a family created through divorce.   

But this makes it all the more important to address it. Your thoughts should cover personal and business succession planning identifying early on who could be the next CEO, who has the business acumen and is respected by the employees is vital. It may be that certain family members are better suited than others, or in fact a non-family member may be appropriate, but identifying and coaching early is important, as well as making those around you know the plan. 

It is also important to cover the incapacity angle as well. Some countries have legal provision for this, but not many - you need a Power of Attorney that covers financial affairs as well as health care. It is also a good time to look at how business financials work, what signatories are required for certain payments- if one key signatory was to fall ill could you still make essential payments? A business can easily collapse if it can’t pay its debtors in a timely manner. 

When it comes to succession planning there are a number of key points to consider, namely: 

• Legal impediments - think how you would like to leave your wealth and then check this is possible - you can’t always leave your wealth to whomever you wish to. For example, in certain European countries, you cannot disinherit your children.

• Unintended consequences - once you have ascertained what limitations are in place, think what impact leaving your wealth in a certain way could have. For example, if your children inherit a large amount of money immediately, would this be in their best interests?
• Marital breakups – if the patriarch or matriarch has already been party to one or more divorces you should make sure wealth passes as you wish.
• Geography - many families live multi-jurisdictional lives. Therefore, you need to make sure that even if you had some planning it is still valid for the jurisdictions you find yourselves in.
• Guardianship - if you have young children, think who you would like to bring them up in your absence and what your wishes would be.

Some people might well say ‘why do I care? I will be dead.’

For some, that sentiment may be true. However, if you care enough about your family and friends, as well as your business empire, when you are living, surely providing for them and making life as simple as possible at the time of greatest stress and upset could be the greatest gift of all.

Victoria Blackburn is an Associate Director at JTC Private Office