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Saving and Investing 26 October 2020

The benefits of investing in succession planning

If you are building a business and generational wealth for your family, what happens when you step down? 

Every business is unique, which is why there’s no ‘one size fits all’ solution to succession planning. This however does not mean that it should not be a key consideration as one builds one’s business. 

Many business owners hand over the reins with no formal plan in place – particularly if it is a family business. This can result in complicated issues arising with heirs who are unprepared to take over the business potentially resulting in loss of generational wealth. 

It is therefore critical to have a formal succession plan in place to protect the asset you have built for your family to enjoy the benefits. 


Family businesses are an excellent way to build generational wealth. If these are you circumstances, wealth structuring needs to extend beyond personal finances or business shares in isolation of each other. There are complex considerations at play, and it may be a good idea to work with professionals to ensure that you have a formal plan in place that protects all facets of your family’s wealth: 

  • Professional wealth structuring and planning helps protect your family’s assets, now and for the future  
  • It helps preserve your family’s financial confidentiality 
  • It allows for an orderly succession of assets across jurisdictions. 


The sooner you start your succession plan, the better. A successful succession plan enables the smooth transition of wealth, a business or both. The more thought and planning that goes into it, the more prepared you will be for every eventuality. 

If you delay until the point where an exit strategy is required, there will likely be issues that can impact the wealth you have built and protected for your family. For example, do you have your board’s full approval if you plan for one of your children to take over the reins of the business? 

Are your children ready for leadership roles? Do they have a firm grasp of the family’s financials? 

  • Many business owners do not feel comfortable talking about finances or their demise with their children particularly if they are not yet adults.  
  • The result is that heirs only start learning about financial literacy when they are adults which impacts their ability to manage and preserve a lasting legacy. 
  • The absence of a succession conversation can cause a delay in heirs developing the necessary skills required for a leadership role. 




Given that succession planning is a roadmap for heirs to follow for the long-term preservation of generational wealth the circumstances of each family member therefore needs to be taken into consideration. 

Identify your goals. Will you and your spouse need future income from the family estate? How involved do you want to be in the business once you step away from a daily leadership role? Would you like to create a legacy or charity for your family? Is it essential that specific values are maintained in the business once you step away? How will wealth be distributed between heirs who are involved in the business and those who are not? 

Determine how you will achieve your objectives. You may need to establish a variety of trusts, gift shares, or create buy/sell agreements. By considering every angle now, you minimise potential problems, conflicts or legal issues down the line. 

Implement the plan. Every plan should be regularly revisited, and this is particularly true of a succession plan. Circumstances could change, and it needs to remain relevant. What happens if there is a divorce in the family, the death of a stakeholder or changes in the business’s profitability? How does this impact the plan? What about business skills? Are your heirs prepared for leadership roles? Regularly revisiting the plan keeps everyone on track. 


One of the most important benefits of a succession plan is that you can work alongside the future leaders of your business.  

This allows you to clearly define your expectations of your heirs. 

It also gives them the ability to share their plans and aspirations. For example, perhaps they do not want to take over the reins of the family business.  

Financial, tax, and other governance issues can also be addressed timeously. 


Ready to plan your succession? Speak to your relationship manager who can assist with navigating the complexities.