FAQ
What is the difference between estate planning and succession planning?
Estate planning is mostly focused on your personal estate and how that will devolve upon your heirs. It’s about drafting a will that you put away and hope to never use. It is focused on bequeathing assets.
Succession planning is an active process of not just planning the succession of your assets, but also mentoring your heirs who will take over the responsibility for the capital that you have accumulated during your life. It is focused empowering a next generation of good custodians.
When should I start worrying about succession planning?
Succession planning starts from the time you are able to observe and comprehend the patterns of wealth ownership or custodianship displayed by those older than you. The planning starts by learning and adopting good habits and observing and learning from other peoples failures.
The younger you are in picking up the patterns (good or bad) the higher the probability of passing the baton of comprehension to the next generation.
Their is a direct correlation between the quality of the conversations than happen between succeeding generations and successful succession
How do I avoid squabbles amongst my heirs?
Squabbles amongst family members during the months and years following the death of a wealthy person is commonplace. Almost all squabbles centre around perceptions of fairness. Perceptions can never be wrong. It is what it is. The antidote to skewed perceptions are quality conversations and a visible and perceived pursuit of fairness.
You must talk about your earnest pursuit to achieve fairness amongst your heirs and allow perception of unfairness to be vocalised and addressed.
It is better to talk things through whilst you are still alive – even if is is difficult. You are the only person who can defuse the perceptions.
What causes most delays in estates?
Most delays in estate are not only foreseeable, but also highly avoidable.
The succession planning process starts with data. Armed with all the data points of what you own and how you it and where you own it and how you own it – one should embark on a scenario planning exercise and test the planning against what will most likely happen. We do not need to guess either math or the law. It is truly not difficult.
An experienced succession specialist will see the gaps and constraints in the planning easily and will be able to provide corrective measures whilst you are still alive and able to correct obvious inefficiencies or gaps.
Delays in estates are caused by a search for data after your death and by guessing either the law or math.
Who should I appoint as my executor and trustee?
An executor is governed fairly tightly by law – and accept in instances where you appoint a malicious or vexatious executor – the executor appointment is not that vital. Proper succession planning has a much higher effect on estate admin efficiency than the choice of executor. However – be mindful of sibling rivalry when appointing a child and ensure that the actual administrator is identified before your death.
The notion of appointing a family member who will then go and look for the cheapest administrator is to be avoided. The worst time to have to make these decisions is the month after the death of a loved one. Don’t do that to them. Take responsibility and select the person or institution whilst you are alive.
The position of a trustee is of much greater concern as a trustee has much more discretion than an executor and the appointment is done for a much longer period. Where possible keep control within the family but use a professional to provide the administrative backbone of the trust. Bad administration is the downfall of trusts and trustees. Mind the dotted i’s and the crossed t’s. It is important. The habit of managing family trusts well also starts whilst you are one of the trustees. Lead by example and listen to advice. Your successors will be more likely to do so as well.