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Succession planning ensures your wishes are acted upon.

The process of handing your wealth (and or a business) to the next generation.

Good estate and succession planning will help your wealth transition smoothly. And, if you have a business, it also ensures a smooth transition to the new owner/s. Consequently, by planning your exit from your business early, you can also maximize the value of your business. Read more about business succession below.

💡 Inter-generational Wealth Transfer.

Many families have trouble navigating the various financial and emotional road blocks along the way. In some cases, the older generation avoids even discussing the prospect of handing over. Above all, putting something of value in place for a successful transition.

If you want to be certain that your wealth doesn’t end up being another tale of ‘Shirtless to Shirtless’’ in 3 generations you need to take the topic of inter-generational wealth transfer seriously. Education of not only quantative, but just as importantly, qualitative factors are paramount so as to ensure your hard earned wealth doesn’t disappear in your children and grandchildren’s generation.

✨ What are the benefits of succession planning?

Succession or estate planning offers numerous benefits for individuals and families. Here are some key advantages:

1. Distribution of assets:
Succession planning allows you to specify how your assets will be distributed upon your death. This ensures that your property, investments, and possessions are distributed according to your wishes, potentially avoiding conflicts among family members.

2. Minimization of taxes:
Proper succession planning can help minimize estate taxes and transfer taxes. By utilizing strategies like trusts and gifting, you may be able to reduce the tax burden on your heirs and preserve more of your wealth.

3. Probate avoidance:
Succession planning can help your loved ones avoid the probate process or simplify it significantly. Probate is the legal process of validating a will and distributing assets, which can be time-consuming, costly, and public. With proper planning, you can utilize techniques like trusts to transfer assets outside of probate.

4. Protection of beneficiaries:
Succession or estate planning allows you to protect your beneficiaries, especially in situations where they may be vulnerable, such as minors, individuals with special needs, or those with spending or financial management issues. You can establish trusts to manage and protect the assets you leave behind for their benefit.

5. Incapacity planning:
Succession planning is not just about planning for your death but also for potential incapacity during your lifetime. Through tools like a durable power of attorney, healthcare proxy, and living will, you can designate trusted individuals to make financial and healthcare decisions on your behalf if you become incapacitated.

6. Family and charitable legacies:
Succession planning provides an opportunity to leave a lasting legacy by supporting causes or organizations you care about. Charitable giving through your succession plan can have a significant impact on the community and allow your values to live on.

💡 To ensure an effective succession plan, it’s advisable to consult with us as we can guide you through the process based on your specific needs and circumstances.

⚠️ Lack of Succession Planning

A lack of succession planning surprisingly common. Taking the first step towards succession planning is viewed by many (as well as business owners) as difficult and delicate. Let alone finding the time to think about what they actually want. One of the other common issues that arises in a family succession, particularly in business/s, is tension between the family and a partner of a family member.

As Estate Planners and Succession Planning advisers we see succession planning as an art of communication and managing expectations for you and your family (and the future business owners).

FACT: 99 percent of businesses in Australia are family owned and operated. Our advice on succession planning. Get it done early. Get it done up front and then get on with business. It doesn’t mean you have to split all the bank and other details immediately. That will be done at the appropriate time, and you can negotiate over time. For that reason, it doesn’t have to be cut and dry up front.

As FMG Wealth Strategists’ principle adviser, I am a specialist in providing proactive, focused and strategic advice for family succession planning and also for business owners in the area of succession and transition planning. More on that below.

As time goes on, an ever-increasing numbers of baby-boomers will be approaching retirement so a good result would be a clear plan. For business owners their plan to exit their business is so everyone walks away from the table having a very clear understanding of what is going to happen. Above all, a good succession plan is all parties feel they’ve been respected and listened to and hopefully most of their needs have been addressed.

To find out more about your succession planning, contact me here.

💪 Succession Planning as a Business Owner

  • What is business succession and exit planning?
  • Why use an Accredited Adviser?
  • What do you need to know?
  • Is there capital gains tax?

💰 Succession planning and ‘exit planning’ is a business strategy.

Most importantly designed for business owners. To assist them in assessing the most appropriate (and valuable) exit options available to them. Individually designed succession plan for achieving their preferred outcomes.

Succession Planning - FMG Wealth Strategists

💸 3 Important Focus Factors of Succession Planning as a Business Owner:

  • Wealth management – Personal and family wealth management to fund retirement and your legacy.
  • Exit readiness – and the maximizing the value of your business.
  • Life after business – what you want your retirement to look like and peace of mind.

Planning for the day you leave your business is a valuable investment. Certainly good succession planning enables a smooth transition with a clear plan for all involved. For most private groups and family businesses, succession (or transition) planning involves planning for the sale of your business. Including passing the baton to family members or business partner/s.

A succession plan should consider the following:

  • Examine the dynamics
  • Analyse the barriers
  • Review the success strategies that are appropriate and unique for your business/s.

An effective succession plan is a complex process. Succession planning raises many potentially difficult emotional, financial, tax, legal and equity issues. Therefore, without a succession plan in effect for both planned and unplanned events, your wishes, the value and the future of your business is out of your control.

When a succession plan is not in place in a family business or rural property, it could lead to a life of uncertainty, anger and resentment for all concerned. Passing on the management of business and farming assets to the next generation is often a complicated process.

💡 Buy/Sell Agreements.

Through buy/sell funding, this agreement ensures a successful transition between owners of the business. Most importantly, this kind of succession planning ensures an adequate compensation in the event of death/disablement/trauma for all parties concerned.

A buy/sell agreement is a contract entered into between business partners. Similarly, it allows for the buy out the other partner’s interest in the business should a specific event occur. Events which may trigger a buy/sell agreement include death, trauma, long-term disability, retirement, bankruptcy or chooses to leave the business.

💡 Small Business Tax Concessions Strategies.

Together with your accounting team we work towards maximizing tax benefits available on selling your business and investing appropriately.

💡 Setting up your buy / sell agreement

Generally, the buy-sell agreement is fully funded by the proceeds of a life insurance policy. As a result, providing for the departing owner or his estate to be paid. The amount equivalent to the departing owner’s interest in the business in the event of his/her death or total and permanent disablement.

In the case of a business carried out by a corporate entity, a buy-sell agreement may take the form of a cross-purchase agreement. This allows the continuing owners purchase the shares of the departing owner. Or a redemption agreement, where the company buys back and cancels the departing owner’s shares. Or, in the event that the proceeds of the insurance policy are insufficient to meet the full purchase price of the departing owner’s shares, a hybrid cross-purchase/redemption agreement is enacted, where the company buys back and cancels any remaining shares not purchased by the continuing owner.

To find out how we can help you with your personal wealth succession and or business exit planning, contact me via email or book a chat here

Arthur Panagis
Author, Founder, Wealth Coach and Financial Strategist

B.Bus (Accountant)
Grad Dip (Financial Planning)
Professional Certificate in Self Managed Super Funds
ASX Listed Equities Accreditation
Tax (financial) Advisor

 

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Our specialty is succession planning and helping clients make better choices with the money they have now and will have in the future. We ensure your debts are structured in the most efficient manner. And you retire debt free, on the date you choose – with money left over to live your best retirement possible.

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