Have you ever considered what will happen to your business when you are no longer able to oversee its operations? Would you like to see your children take over and drive your business to future success under the family name?
You may have all the answers to these questions but how do you ensure your wishes will be carried out?
A succession plan is important for all business owners but particularly important for those who may have a business where family intend to continue the business legacy.
Here are five reasons why you should turn your mind to succession plan early:
The reality is we never know when our time us up. Without a sound plan in place, you leave a lot in the hands of others to interpret situations at face value. It’s common in a lot of family businesses to have your children working in the business. In some cases, children could be working in return for accommodation or other benefits rather than a traditional wage. Although you’re united and on the same page now, grief can bring out the worst in people, if your agreement is not documented, the authorities may see this as unpaid wages, which means your estate could be up for further interrogation.
Determining how much you will require in retirement and working your plan back from there is an important exercise to undertake regardless of your age. For those nearing closer to retirement, it’s even more critical to understand the figure required to maintain a good quality life.
Unfortunately, there are instances where upon family members passing, their wishes have not been carried out. As part of the succession planning process, legal documents such as your will and enduring power of attorney will be reviewed to ensure they are sound and on track to be carried out as you had hoped.
As people age alongside their business the operations aspect slowly becomes more challenging to run. For those who wish to hand over their business to the next generation careful planning needs to be taken. A succession plan will identify who you need in your business to continue its success and allow time to transition your knowledge to the right person. Not only does this give you peace of mind it also gives your financier faith there is a strong future ahead for your business.
Without the right financial structure and facilities your succession plan may not be able to be carried out as planned. During the succession planning process your Exant advisor will review the finance structure and the facilities you have now and what you will need in the future. If required, we can also assist with securing or negotiating a more suitable option.
Our Advisors take a balanced non-judgemental approach in the way we carry out succession planning to ensure our client’s wishes are fulfilled. We work directly with bankers, lawyers and valuers to ensure right outcomes are achieved for all parties involved. If you would like to review or implement a succession plan to get your estate in order, speak with your usual Exant advisor or alternatively, contact our estate planning specialists John Kotzur and Tim Mouritz via the form below or on 07 3218 3900.
CASE STUDY
Exant Advisory specialists have assisted several clients in a wide range of circumstances in ensuring their wishes are fulfilled during the process of their succession planning. Below is an example of how we have been able to support our clients to achieve the results they were looking for.
Case Study 1
Client: Rural property owners (husband and wife) who owned two properties and two adult children working within their businesses.
Need: The client wanted to transition the ownership of their properties to their children however while they broadly knew what they wanted to achieve were unsure how to go about it or how much they would need to retire.
Result:
Our Advisors worked with each of the parties involved (husband, wife and children) to identify their goals individually determine a success plan that met their future desire. We were able to guide the parents through an effective process of sorting out which properties will go to each child and deciding on the suitable proportion of each property to be disbursed while overall and ensuring the parents have efficient income to support their retirement based on their own needs. We also recommended they conduct a separate piece of financial advice to support the retirement figures, which our Advisors can complete under our current Wealth Management licence. Once the loan had been approved by QRIDA at 2.55%, we worked closely with their solicitors to ensure contracts are drawn up in line with the family’s wishes and relevant easements and option agreements were in place.
