Creating your succession plan
Once you have established yourself financially, it’s time to think about what will happen to your money when you’re gone. A succession plan will ensure it doesn’t end up in the wrong hands.
What is a succession plan?
A succession plan is a strategy used to outline where money and control of your assets will go when you can no longer manage things yourself due to age, ill-health or death.
If you fail to build a proper plan, either for your personal or business assets, things may fall into the wrong hands when you’re gone. The wrong people may take control and your wishes won’t be carried out.
While a succession plan is similar to a will, it often is a more complex document. It will be far more in-depth and will cover the roles and responsibilities allocated to each party as well as the movements of funds and assets.
First steps to create your succession plan
To start building a robust succession plan, you need to sit down with an accountant and get your ducks in a row. Review your assets, including property, shares, cash and valuables. This will help you know exactly what you have to pass on.
After you’re clear on your position, you need to plan how you would like things to go in the future. A beneficiary should be nominated for each asset and plans should be made for the funnelling and handling of all future funds.
Not everything has to go to your family. You may wish to make a charitable donation or to pass assets onto people who have helped you in your life.
As part of this process, you’ll also need to nominate the person who is in control of distributing assets on your behalf. It does not have to be a family member.
Ensure everything is legally binding
You need an experienced lawyer to ensure your wishes will be executed after you’re no longer able to make decisions. A completed succession plan needs to be recorded and endorsed by a legal entity. Without the proper legal backing, it’s possible for your plans to be overridden. Verbal agreements can not uphold your legacy so work with a professional to ensure your plan is legally binding and not open to disputes.
While every decision is up to you and you don’t have to share exact details, it helps to loop your family members in so they are aware of who your lawyer is and who will execute your succession plan when the time comes.
Making changes to your plan
No matter how well you plan, life always throws curveballs and you may decide to update your succession plan. If this is the case, you’ll need to work with lawyers again and make sure any amendments are recorded and binding.
Changes that have not been witnessed and authorised by the appropriate legal parties can easily be contested. Don’t rely on signatures on napkins or handshake agreements! Read more about what happens if you don’t leave a legally binding will here.
Who can help
A succession plan is a complicated and intricate document, which is why it makes sense to enlist the help of a professional.
Many families work with specialist financial advisors who deal with wealth transition, especially when there are numerous factors involved such as property, cash and the ownership of a business.
If your succession plan is complex, you may also need a period of negotiation and mediation, to help smooth the process.
If you are open about your intentions with all parties involved and enlist the right support, there is no reason you won’t have a successful succession plan to prepare your wealth for the next generation. Take the time you need, and your plan will put your heirs and your legacy in the best standing.
Want help to plan your family’s future? Contact Edge Advisory Partners.
