TRANSITIONING A FAMILY COMPANY TO FAMILY MEMBERS Family Office with Lance Meikle

TRANSITIONING A FAMILY COMPANY TO FAMILY MEMBERS
I’m going to highlight the key points and takeaways that I have experienced personally as a business owner and father, Family Office specialist, a facilitator and a non-executive director.
Mothers and fathers of family-owned companies want to safeguard future generations and those around them that they choose to support. They live, breath and sleep the company is the mothership that must be protected at all costs because it is the protection of them personally and the future financial protection of those they care about.
Transitioning a family company to family members must be book-ended by Estate Planning and putting the fundamentals in place, such as wills, powers of attorney and insurance.
A will is a cornerstone of succession planning because it sets out how an estate should be divided between beneficiaries.
Powers of attorney can ensure a trusted person can administer assets and protect interests if the testator (this is the person making the will) becomes ill or incapacitated. The powers can be specified to match requirements. They can also be revoked.
Insurance can be a tax-effective way to top-up an estate and take care of tax obligations and debt. Insurance payouts can also help equalise imbalances in the distribution of wealth, which might arise if there are valuable but illiquid assets.
Some statistics worth taking note of:
•According to the Productivity Commission, Baby Boomers in Australia are expected to bequeath $224 billion a year in inheritances between 2023 and 2050 as housing and superannuation wealth creates a $3.5 trillion windfall for younger generations. Most families are unprepared for the communication and planning required to ensure a smooth transition of this wealth, which is expected to increase fourfold over the next 30 years.
•ANZ Private Wealth, which manages the wealth of 7000 families, has reported 70% of intergenerational wealth transfers fail because of family conflicts, dissipation of wealth, misaligned values, and delays. The qualification to be an ANZ Private Wealth customer is about $3million worth of investable assets or debt (excluding the family home). ANZ’s analysis is based on 3000 private banking clients over 25years.
•It is estimated that family disputes about wills and estates have jumped by about 80% in the past decade as the number of “blended families” has risen sharply. Most of these cases end up in court, often wasting large chunks of their inheritances in very expensive legal fees that split families and leave unhappy legacies for future generations to resolve.
Q: What are the steps | strategies that create a successful transition of a family business that secures wealth, values, and legacy without blowing up the family?
•Identify who is going to be your Advisor Concierge (trusted advisor)? Don’t assume that you will turn up to your Accountant and have a chat and it will work itself out, IT WON’T. Most qualified accountants are (at best) not skilled on this topic and (at worst) not interested in it. UNDERSTAND that what is required and critical to achieve the result you are after is EXPERIENCE. Experience does not only count, it is everything.
•Consider establishing a Family Office that, along with a plethora of other benefits, has Management Team meetings to discuss and implement what is to go to who, when and how. These meetings should also include family committees to discuss various operational aspects of the company, who wants to, and does not want to, work in the company, together with investment decisions and philanthropy or impact investing decisions. These meetings are typically held quarterly.
By taking the time to discuss, debate and deliberate families can:
- understand the views and aspirations of all members of the family and take them into account
- share information about the family’s wealth while maintaining personal and commercial confidentiality
- provide the next generation with a