Succession Planning – Practical Insight 1 – What is a Succession Plan?

Succession Planning can be rigidly defined as the action or process of inheriting title, property and assets. It is in my opinion more about obtaining Peace of Mind for individuals in that they are financially secure themselves and can provide for their family both now and in the future. This process also allows individuals to time, manage and control wealth transfer to the next generation in a tax efficient manner.

A key starting point in this process is the preparation of an up to date Statement of Affairs for the individual to determine whether or not they will have enough funds to cover their lifestyle both now and in the future. This can refocus the individual on what assets and liabilities exist and assist in identifying potential beneficiaries.

Financial clarity and certainty ensures the individual is better informed before making any key decisions on when, how and to whom their wealth is to transfer. For example, if the individual has comfort of knowing they are financially independent, they could start the succession process at an earlier stage. If it is the case that the client realises they are not financially independent, they can start the planning process now to achieve this independence at the desired point in the future.