It’s the time of year when many of us start thinking about tidying up our homes, or doing other tasks that we’ve been putting off. Sorting out your succession planning might be a good place to start.
Succession planning isn’t just for the super-wealthy, and it doesn’t mean immediately giving up assets or control of a business.
On the contrary, anyone who owns a business, or indeed any assets that require management or maintenance, needs to think about who will do that work in the future. And good succession planning puts you in control, while reducing the risk of problems arising further down the road.
There are many tools available. Which ones are right for you will depend on many factors: the kind of assets you have, whether any of them are held overseas, your objectives and values, your family dynamics, and more. Here are four things to think about.
Succession planning isn’t just for the super-wealthy, and it doesn’t mean giving up assets or control
Let’s start with communication. If you have a family business that you want to pass on to the next generation, will all your children be equally involved, and do they actually want to be? Will they need support from other people? The best way to explore questions like these is to have frank and open conversations in which everyone has a chance to air their views and – just as importantly – listen to other people’s.
Next, control. If it’s important that you retain control over assets for now, there are various legal structures that might be suitable. Trusts are probably the best-known, but other options such as Family Investment Companies are a better option in some cases.
Third, tax. Even if this isn’t a particularly high priority for you, it’s worth taking account of it when deciding what arrangements to put in place.
And don’t forget philanthropy. Succession planning is a good time to think about any charitable giving that you might want to do, either now or in your will. As with all the other legal aspects, there are various ways to do this, so it’s worth ensuring that your generosity has the maximum impact.
The best first step, for many people, is to talk to an expert adviser about all the details of your particular situation. Sorting out your succession planning could be a rewarding move this spring, even if tidying the garage has to wait another 12 months.
Keith McLaren is Partner in the Private Wealth & Tax team at UK law firm Shepherd and Wedderburn
Partner Content in association with Shepherd and Wedderburn
