Putting together a successful succession plan is rather complicated. It is very important for a person to ask some intriguing questions to himself as well as his family members at every stage of his life. The families should consider planning for their assets and liabilities at all stages of their life while deciding on their succession.
Below are some chapters of life where a thought needs to be given to succession, for smooth transmission of assets to next generations.
Stage One: The Evolution Stage
When someone starts his career as a beginner, he always has this hope to become successful. No one puts in efforts, invests time and money without having in mind a fruitful future. This is actually the correct age to start thinking about developing a succession plan for himself and his family. This is the time when he is not caught up in too many challenges in life.
Even for a startup business, working without a succession plan can invite disruption and uncertainty. The preservation and accumulation of wealth will depend upon how strategic and focused, the succession plan. When one starts engaging into succession, he starts to have a focus on the future and also a better understanding of the present.
Stage Two: The Established Stage
Even when everyone agrees succession planning is important and necessary, various reasons pop up and delay the process. This stage is where you’ve established yourself and have built a reasonable net worth for yourself. A good plan takes time to develop and implement. Here is the time to wherein you may select an appropriate vehicle for your personal as well as business assets.
The choice of an entity structure can change the complexion of a succession process in a number of ways. Strategic succession planning becomes even more complicated and tiresome process when family issues such as conflicts between the family members, legacy, birthright, communication gaps, favoritism are added to the mix.
Stage Three: The Retirement Stage
While having a succession plan is a key aspect, the timely communication of the plan to the legal heirs is of utmost importance. One needs to be sensitive to the needs and expectations of others and at this stage of life, obtaining appropriate advice in facilitating that process in order to avoid disruption and interpersonal conflict within the family, is also necessary. Everyone should make sure that special provisions are made for the welfare, maintenance and basic necessities are easily met.
(By Nitin Rao, CEO, InCred Wealth)