Succession Planning: Passing on Wealth and Planning for Continued Prosperity


Succession Planning as a Component of Family Governance

A succession plan prepares heirs to transition successfully and preserve, grow and pass wealth from generation to generation. Otherwise, the family wealth enterprise can diverge from the family’s values, philosophies and direction, which may erode family unity, endanger the legacy and dissipate financial wealth.

Effective governance protects these five forms of family wealth, and succession planning is a pivotal aspect of governance:

• Financial capital (money and assets)
• Human capital (the family members themselves and their skills and experience)
• Intellectual capital (knowledge, ideas and perspectives)
• Social capital (professional and social relationships, community involvement and philanthropy)
• Ethical capital (values, philosophies and responsible practices that improve the lives of others)

Transitioning Ownership vs. Leadership
The decisions made regarding transitioning ownership of the closely held business or family office may not necessarily be the same decisions that are required for transitioning leadership and management. To successfully transition the family ownership, business and financial wealth to succeeding generations, leaders must be groomed and/or nurtured to assume the mantle of these responsibilities with competence. In order to ensure that the family legacy remains intact and on course, each person assuming a new role must embrace the family’s common vision. Outlining deliberate plans to accomplish related goals across the family, business and ownership will help achieve an orderly, prosperous succession that protects the family legacy for generations to come.

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