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Estate Planning and Business Succession Planning

Estate Planning is vitally important when a business is involved: and if that business is co-owned with members of extended/ unrelated families, Estate Planning and Business Succession Planning should be undertaken in close sequence, preferably the latter preceding the former.

Business Succession Planning assures capital for continuity

All businesses need capital to function. This capital will most often come from the business principals (initially by way of start-up/ seed funding; later by retention of profits earned) and, in appropriate circumstances, partly from a commercial lender such as a bank.

If a business principal dies their legal personal representative (the executor of their estate) – as well as the business bankers – will want to know that they will get their money: and in due time. If these ‘creditors’ are not confident their loan is secure, they may call in the debt. The cashflow consequence of such an event can be devastating for a business.

Unfortunately, many business principals fail to plan for their own, possibly untimely, death.

Estate Planning principles at risk

Where external creditors exercise the power to call in their debts in these circumstances, the consequence of them doing so may be the decimation of the assets that would have been available to the executor of the estate (remember ‘the right funds’?); or at the very least, the timing of the beneficiaries (‘the right people’) receiving their inheritance as represented by the deceased’s share of the business may be protracted (remember ‘the right time’?).

What should be done?

Business Succession Planning is important: our article on this topic provides some strategies for a successful process.

Once the business succession planning process has been completed, the estate planner will need detail about the following matters –

  1. Clarity as to the extent and nature of all business debt;
  2. Accurate documentation for all loans;
  3. Documented responses to the following hypotheticals:
    • If I died – what would happen?
    • If my business partner died – what would happen?

Where can I get help with Estate Planning (including Succession Planning)?

The Continuum Financial Planners Pty Ltd Estate Planning service offers clients:

  • working with them to prepare the detailed information required for their appointed estate planning specialist lawyer; who can then
  • consider the client’s individual detail in light of their estate planning experience so as to design a plan appropriate to the client’s present and known likely circumstances; and where needed
  • provision of access to our referral connections of such professionals (to whom we are happy to refer you to match their expertise with circumstances such as your own).

To avail yourself of this service, contact our office (by phone, on 07-34213456; or our website Contact Us page) for an appointment with one of our experienced advisers.

The experienced advisors at Continuum Financial Planners Pty Ltd are also available to work with you to ensure that your business succession plan is appropriate to meet your goals. For an appointment to consider your particular circumstances and needs, call us (on 07-34213456) or Contact Us through our online facility.

More about Estate Planning…

This is the fifth in a series of 13 articles on the topic of Estate Planning: further articles in the series seek to bring clarity to some of the issues and implications to be dealt with in fulfilling the three key considerations of Estate Planning – getting the right amount of money, to the right beneficiaries and at the right time; and to prepare you and your family to understand the final plan when drafted. The remaining articles consider –

(This series was first posted to our website over a period from late-2011 through early-2012; it has been refreshed, updated and re-posted in February 2015.)

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