Everyone talks about succession. Here is our perspective on this important aspect of every family situation and why succession is a family question.
Families spend considerable time and money designing succession structures: trusts, foundations, holding companies, shareholder agreements. They may have carefully drafted drag-along and tag-along clauses. Lawyers and tax advisors produce documents of impressive technical precision.
However, the structures are rarely the problem.
What tends to go wrong is something the documents cannot resolve. This can be whether the next generation wants to own something together or whether they share enough of a common view about risk to make collective decisions. Most importantly, whether there is someone trusted by all of them who can be a neutral voice when the structure is tested.
I have seen families with sophisticated legal architecture and no shared understanding of what the wealth is for. And I have seen families with relatively simple structures who navigate generational transition smoothly because they had spent time on the conversations that the lawyers cannot have for them.
The role of a family advisor in succession is not primarily technical. It is to create the conditions in which those conversations can happen clearly, without the distortion that comes from each party having a different advisor with a different set of incentives.
The legal structure follows from that. It rarely leads it.
PS: Here is another insight I published earlier to address the whole topic of complexity: The Cost of Complex Wealth Structures – ASFOS