If you’ve been thinking about succession planning, you already know there’s a lot to consider.  Dealing with estate minimization, tax avoidance, gifting, buy/sell agreements, etc., etc., can give people major headaches.  And then there’s the human element associated with the transition of wealth, family leadership, and business concerns from one generation to the next, where we sometimes trade headache for heartache.  

How does anyone make it through this maze?  Well, everyone does.  Some make it easier than others; and here’s how many of them do it.  They assemble a team of advisors who have extensive knowledge about succession legalities and personal estate planning and add in other professionals who can provide the emotional guidance and support that can help keep families whole, or, in some cases, help put them back together.  

The sensible approach to succession success requires identifying the end financial and legal goals. If you’re like most people, you want to avoid as much taxation as possible.  Some of the better approaches include gifting to family members; philanthropic endeavors so that you put something back into the community; and a variety of sophisticated trust maneuvers that minimize the government’s ability to access what you would rather pass on to family and community.

For many people, the sensible transactional processes described above can be fun and more-or-less exciting.  What all of them have in common is there’s a generally accepted way to carry them out.  When it comes to the more sensitive aspects of succession planning, there are no written rules, no formulas to follow, and the outcome is never certain.

To improve the chances of getting the outcome you want, here are a few steps that have worked for others.

  1. Communicate your legacy.  Leave some “breadcrumbs” so that future generations can follow the path you want them to take. Talk to your family about your wishes for the business and family’s future. Do it the old fashioned face-to-face way.  Make a video. However you do it, make sure you chronicle your history – why you started, where you wanted to go, how you got there and include the struggles as well as the triumphs. 

  2. Transfer meaningful assets to your beneficiaries.  Some people want cash.  Some people want a business.  Some want a meaningful career.  Know what matters to those on the receiving end. Leaving someone a minority position in a company that never pays dividends increases paper wealth; but it may not satisfy their needs.

  3. Focus on equitable rather than equal distribution.  Unless you have all your assets converted to cash, then equality is hard to come by.  

  4. Recognize that some of your personal possessions may have sentimental value to family members.  And, some of them may have none.  Find out who would like what, and then make sure they get it.  

  There’s nothing revolutionary in any of these suggestions.  All they require is common sense and a level of sensitivity to those         around you.  The trouble with common sense, however, is that it isn’t common, especially in emotional times.  

Sensitivity requires communication.  And the trouble with communication is that most people think it actually takes place. That’s why you need to leave some breadcrumbs. 

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