Collaborative Estate Planning; a rock symphony guide

 

1. Who are You – The Who

Silly question? In Estate Planning it is the Number 1 question.

If you are an individual

Your Will applies

If you are a joint owners  

Your Will does NOT apply

If you are a company        

Your Will does NOT apply to the company assets, but DOES apply to the shares you own. However, what does the Company Constitution and any shareholders       Agreement say about that?

If you are a trust    

Your Will does NOT apply to trust assets. Your Will has some relevance if Trust Deed allows you to replace officeholders in the Trust

If you are an SMSF  

Your Will does NOT apply unless the super monies are paid into your estate.

 

2. Money – Pink Floyd

So, where is your money and how do you plan dealing with it?

What are the effective tax strategies?

Is wealth you inherit subject to special rules with special expectations?

 

3. Where do the children Play Cat Stevens

Children must play.

Children must learn.

Have you taught your children the responsibilities and privileges of wealth?

Will they fritter their inheritance away?

In a blended relationship, how accepting are your children of

  • half-siblings?
  • Non-direct family members?

 

4. It’s not fair the perennial lament of children of all ages

Does ‘fairness’ equate with equality?

What are the needs of your children? Of others you may wish to benefit directly?

Grandchildren, as we live longer, often have a greater role in our lives than previously. You may want to benefit grandchildren directly. But if one child has more of your grandchildren than another?

What benefits do you plan for non-direct descendant children in a blended family – your blended family, or that of your children?

 

5. Like a Rolling Stone – Bob Dylan

In this global village, children live abroad. Are they non-residents, dual residents, or foreign citizens, for tax purposes?

Do they pay the special taxes on their inheritance that Australian tax residents do not, or is that tax shared?

Do you have ‘rolling stone’ assets and so assets in other countries?

 

6. Sugar Mountain – Neil Young

What is the LEGACY you want to leave? Just to the next generation? Or do you want to imbue the next generation with both wealth and wisdom to instil stewardship of both for future generations?

For your family business – either commercially or in managing family wealth, or both – what plans have you set up so when, how and by whom, will they spring into action?

 

7. You’ve got a friend – Carol King

With its array of specialist over a variety of fields, FBCN can assist you through this labyrinth. FBCN Members collaborate – our hallmark – amongst themselves, or with your own well-established advisers, so, like the 3 tenors in Nessun Dorma, you can achieve the high notes.

 

© 2015           David Lucas

                        FBCN Director

                        0412 900 777

                        dlucas@fbcn.com.au

Family relationships are complicated

FIVE STEPS TO IMPROVE FAMILY NEGOTIATIONS

By Bob Hayes  – Family Business Consultants Network

 

Family relationships are complicated, even more so when your father, mother, or brother is your business partner. Family negotiations are difficult yet also contain built-in advantages. Key concepts include:

  • Compared to managers in other businesses, managers running a family business are faced with additional complexity in negotiations because of personal relationships and family history.
  • Negotiators who negotiate multiple issues simultaneously are more easily able to recognize value-creating tradeoffs.
  • Effective negotiators get past stated positions (what a party demands) and understand the underlying interests (why the party wants what it demands).

 

Negotiations between family members who own a business are different. This is because family relationships are distinctive kinds of relationships, and having a family business raises the stakes of—and often complicates—a family negotiation.

Family relationships often have deeply ingrained patterns that have developed over years of interacting. Relatives develop and play certain roles in their families, which tend to become fixed and limit the ways family members interact. Some of these patterns and roles can aid communication and negotiation, and some can derail communication and dispute resolution.

In addition, communication between family members is notoriously complicated. Because of the sensitivity of their relationships, relatives struggle between openness and caution in their statements to one another.

In addition to these factors that apply to all family relationships, family members who are in business together have a lot at stake and feel pressured to consider what’s good not only for the family but also for the business and its owners.

Relatives can experience role confusion (should I act as a father or boss, a daughter or the CEO ?) and struggle over the appropriate role to play in a particular negotiation (e.g., is this a father-daughter negotiation or a boss-employee negotiation?). In vaguely defined situations, there is increased opportunity for misunderstanding and conflict.

But given the distinctive nature of negotiations for families in business, there are 5  basic principles of negotiation that have proven relevant in a wide variety of deal-making and dispute-resolution cases that can help family negotiations to be productive while protecting family relationships.

The 5 basic principles are as follows:-

  • ANAYZE THE NEGOTIATING SPACE
  • DON’T TRY TO BEAT THE OTHER SIDE
  • UNDERSTAND THE OTHER PARTY’S INTERESTS, CONSTRAINTS AND PERSPECTIVE
  • AVOID SINGLE ISSUE NEGOTIATIONS – IDENTIFY AND NEGOTIATE MULTIPLE ISSUES SIMULTANEOUSLY
  • NEGOTIATE OVER INTERESTS NOT POSITIONS

 

( Source : John. A Davis and Deepak Malhotra – Harvard Business School )

Experienced Consultants at the Family Business Consultants Network are available to assist Business Owners work through these types of negotiations to achieve good outcomes.

Call us for an appraisal of your Business.

 

Bob Hayes

Director

Family Business Consultants Network

Mobile :  0407 317803

Email :   bhayes@fbcn.com.au

Have you ever practiced dying! Succession Planning – What is it?

By David Murdoch, Family Business Consultants Network,

Not a thought many people have, however have you ever practiced dying and considered the state of your affairs left behind for your family?

Have you ever practised dying or are you too busy?  Have you thought about what could happen ‘financially’ to the people left behind in the event of any tragic and unexpected circumstances?

In fact, statistics tell us…

  • Illnesses such as cancer, heart attack, stroke and vascular disease kill more than 86,000 Australian annually. (Australian Heart Foundation Fact Sheet and Cancer Council of Australia)
  • Each year in Australia, 26,000 people will suffer a heart attack, 40,000 a stroke and 154,000 a critical illness. (Insurance watch statistics)

Research in Australia also suggests that…

  • 60% of Australian families with dependants will run out of money within 12 months if the main income earner dies
  • Only 1 in 10 Small Business Owners in Australia have constructed their Business Will correctly
  • 80% of Australian’s are underinsured

People are uncomfortable thinking about this, but…

‘Family Risk Management’ comprises inter-related areas to ensure the right people are taken care of when they need it most:

  • Estate planning – those assets and liabilities that are dealt with by a Will
  • Superannuation and Insurance planning – which may or may not form part of a person’s estate
  • Principal residence, joint and business asset planning – understand the special issues in relation to these assets
  • Entity planning – how effective control of trusts and companies will pass to successors

Do you have a well thought out plan in place to protect you, your business and your family from the potential risk of an accident, death or illnesses occurring when you least expect it?

We believe this is an opportunity for you and your families to assess your options while you have the capacity.

If you would like more information please contact David Murdoch – Family Business Consultants Network
Mobile – 0416 856 701 or email dmurdoch@fbcn.com.au

Do “fossilised” owner/parents threaten the survival of their own family businesses?

By Jon Kenfield, Family Business Consultants Network,

fossil

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” – Charles Darwin

An increasing number of family business owners are now past their best decision-making days and may be starting to place the survival of their businesses and families at risk, as they “fossilise” on the job.

This is not a criticism of what they’ve achieved in their lives, as many of these entrepreneurs have built vibrant businesses from nothing to:   provide jobs for many; to feed, clothe and educate their own and their employees’ families, and to make enormous contributions to their communities and to the Australian economy in general.

BUT, the GFC disrupted many of their plans AND the onward march of time takes no prisoners.  Over the course of a long life we all go through “ages and stages” and because family business cultures are powerfully shaped by their charismatic leaders, some businesses, like some pets, take on some of their owners’ characteristics.  When this translates into the greater desire for caution and security that tends to come with age, the result isn’t pretty or positive for any business that participates in competitive markets.

For sound natural, biological and psychological reasons most people, especially leaders,  transition through life stages that look like:  dependency; learning; doing; supervising; teaching; leading; mentoring and story telling.  Most leaders would do well to transition out of their leadership roles to become mentors and sponsors of the next generation in their 60s.  Experience and observation show that it gets harder after they hit 70, and monumentally difficult for those in their 80s – and for everyone around them!

To avoid fossils becoming the geology of business graveyards they need to transition leadership, management and ownership to a new generation of family members, employees, or competitors.  The alternative is to walk away from the businesses they’ve loved and laboured over for so long, or allow them to be hoovered up by larger organisations that may just strip the assets and retrench most of the staff.

FBCN helps owners, family members-in-waiting and employees to reverse the effects of personal and business fossilisation.

‘Fossilisation’ of family business owners

Listen to the Jon Kenfield Podcast on ABC this morning.

According to the Family Business Consultants Network, a growing number of older generation business owners who are staying on beyond their use by date.

Click below to listen.

Podcast

Accountants Daily

Network launched for family business adviser

The Family Business Consultants Network (FBCN) for business advisers, which is committed to solving family business issues, has launched in Victoria.

Made up of 16 service providers, including accountants, lawyers and consultants, the FBCN is a network committed to working independently, and with each other, to better serve family businesses.

FBCN chair Jon Kenfield said since its launch, the FBCN has been well received as a “much-needed local adviser initiative”.

“Family business owners are attracted to FBCN’s approach because they’ve heard so many horror stories about how other family businesses were ‘derailed, or worse’, by insensitive professional advisers who tried to provide technical solutions in isolation from their human needs,” said Mr Kenfield.

“FBCN members sign up as individuals who share a simple philosophy: we put our clients’ interests first,” he added.

The FBCN has strict guidance standards for service delivery for its members commencing “with a detailed analysis of a clients’ real needs, so we can develop a plan that’s entirely focused on satisfying those needs – rather than those of the adviser,” said Mr Kenfield.

Family businesses present advisers with a unique set of challenges that, if not recognised and appropriately dealt with, can seriously damage both the family and the business.

“A common affliction for many family businesses is an inability to separate personal and family issues from business issues – allowing each to invade the other – often with catastrophic consequences,” said Mr Kenfield.

“FBCN was established to address these issues by combining the best of traditional advisory practice with innovative thinking in family business advisory. The result is world’s best practice, available now to every Australian family business,” Mr Kenfield said.

Membership to the FBCN is by invitation only.

Read Original Article…. Click HERE…