We started with why succession planning is hard, continued to goal setting and separating estate and transition planning – steps 1 and 2 – and now we move to setting estate planning priorities, building a transition team and putting that team to work.
Prioritize the primary drivers
I’ve seen a variation of this situation play out regarding estate planning: Farmer Joan is meeting with an attorney and family facilitator. Coming into the meeting, Farmer Joan has been thinking mostly about how to prevent the chaos that happened with her own siblings. Her parents didn’t have a will, so everyone scrambled to figure out what to do. She wishes her parents had let their kids know what to expect. Joan plans to ask her kids for input after this meeting.
Ten minutes into the meeting, the attorney is stressing the urgency of avoiding estate tax. The family facilitator is encouraging her to rethink what’s fair for her children and whether her gifts should be equal. There’s a lot of technical jargon and oh so many options. Her head is spinning. Joan leaves committed to pursuing a generation-skipping irrevocable trust and planning to tell three kids they’ll receive much less than the fourth.
Now those are all relevant considerations. But given the complexity of estate planning, it’s easy to get sidetracked by one aspect and lose sight of others. prior to meeting with advisors, I challenge you to rank order which of these aspects are most important to you:
- Providing for an orderly execution of your estate with as little hassle and stress as possible for your family
- Avoiding as much estate or income tax as possible
- Feeling confident that you were “fair” to your family in the definition relevant to you
- Keeping assets only in family bloodline (which impacts who owners can sell to, whether spouses or employees can have ownership, etc.)
- Protecting assets from creditors or future divorces
Your priorities may rightfully change as you learn from advisors. But at least you have a list to refer to and can ground yourself. It’s fine to shift directions, just make sure you do it intentionally.
Build your team
What support and advisors you need probably depends on your answers to No. 2 and No. 3.
Here are some to consider:
- Think internally first. Who needs to be consulted and/or informed? What family members or employees have a vested interest? For transitions of leadership, the answer is almost always to be widely inclusive. For transitions of ownership, it depends. Be honest with yourself – and them – about whether you’re asking for input or telling them what you intend to do.
- Financial and legal expertise. Realize that not all attorneys or all accountants are experienced in this area. You may need a specialist beyond the person who does your taxes and land deals.
- People expertise. If your group will get bogged down by conflict or awkwardness or inertia, consider hiring a facilitator. We’re skilled in helping groups communicate, have a technical understanding of the issues at play so we can translate, and we can bring examples from other situations.
- Project manager. Find an adviser to serve as ‘quarterback’ of the process to keep it moving.
Make progress
After you have your team identified, have your first discussion. Based on that, set timelines and accountability. Decide your First Next Step and get going! You may not solve it all this year (remember transitions of leadership occur every day over a period of time). What’s an intermediate step that would be significant this year?
Good luck!
Davon Cook is a family business consultant at #Pinion. Reach Davon at davon.cook@pinionglobal.com.