Posted on April 3, 2020
Two of the King brothers, our very good friends and long-time clients, sat down with us to discuss estate and succession planning. They both operate highly successful businesses in the bus and coach industry and we’ve worked with them both for about 30 years now. It has been an absolute pleasure and privilege to have known them over this time and watched their businesses grow under their strong leadership.
Although they don’t enjoy talk of retirement so much, both being active leaders in their businesses, they have long recognised the importance of estate and succession planning in protecting their families as well as their employees and businesses.
Venetta: After going through this [estate and succession planning strategy] process, do you feel like you have a better understanding of your situation and your estate planning process?
John: Absolutely. It moves from day to day, what we did a few years ago has now been superseded by this process and this process in a couple of years will be superseded again. It’s important to keep it up to date.
Venetta: Have you seen value in this process and what is your feedback on the results we have achieved?
Gerard: I see the value in it because my previous will really said nothing and could have been contested at any time. The boundaries are in place now and what I want done is in place now. What I’ve said that I want done will be done by the executors.
Venetta: As a successful operator of a group of companies in the bus and coach industry, do you think there are many operators out there that have not addressed succession and estate planning?
John: Generally, in our industry, they’re family operations being handed over to different family members. Sometimes there isn’t a clear understanding of what you want to do. We’ve seen this destroy businesses in the past, where shares have been handed out to family members without due process and thought. If I’m not around to control it, I want an estate plan to guide my family members going forward.
Venetta: What would your message be to other bus and coach operators in terms of succession planning?
John: It’s a clear message. If you’ve worked hard and you’ve put effort into building something up, you want to make sure that your legacy is driven forward from that point. Or sell. Because you have other lives in your head. It’s not just your family, but the people who come to work for you every day. You need to make sure they get a result as well.
Venetta: What is one key takeaway you have learnt and implemented from this process?
Gerard: It’s not just one executor now, as I thought, it’s a chain of command. It involves a lot of people and a lot of processes; the processes then come to the end result that my children are protected and the assets are protected. And my business will go on.
Venetta: Do you think many people are struggling with effective estate and succession planning?
Gerard: I think it’s important for people to have a will. During this process, I’ve spoken with three people around about my age if they had a will and all three of them said no. Which absolutely shocked me.
Venetta: What is your feedback for us on the planning process you’ve experienced?
John: We’ve done this estate planning from day 1, some 27 years ago, when we all got together. We’ve come up with this document, that really emulates what we wanted to formalise. From day 1, we’ve spoken to the professionals about everything we do. To the point where, one day when I’m not around, I know the estate will then drive the right processes.
Venetta: You’ve set up a clear process that your children understand and a strategy around a board of directors that will continue to run the business; how important is it to communicate your wishes early?
John: All those people that are involved, know about it. From middle management to senior management and now the board structure. It’s important that it’s done this way because you don’t want middle management getting nervous and walking way. It’s too big. You have to control the outline of the process.
Venetta: Thank you so much, we really enjoyed the process.
Gerard: That’s alright, it’s been good. Can we go dancing now?
We hope you enjoyed this post and hearing from two great Australian business leaders. If you are interested in an obligation-free discussion about your own situation or any questions you may have, please don’t hesitate to contact Chris Hall, Director, at his email address firstname.lastname@example.org or Venetta Sacha, Director, at her email address: email@example.com
Posted on April 3, 2020
Do you know that approximately 50% of Australians don’t have a will and that of the remainder many have simple wills that do not adequately address the complexity of their family affairs and business assets?
Did you realise that your will can not deal directly with your superannuation assets and without proper estate planning within your super fund there is a risk that your super benefits will not be distributed according to your wishes?
A new business client came to see us and when asked about his will and estate planning he replied that he had a simple will prepared 7 years ago. Since then Mr B had acquired a new business and had a marriage breakdown. He was in a de-facto relationship for 4 years and not legally divorced from his wife. He had two children with his wife and a child with his partner. His will was technically invalid and his estate will not be distributed in accordance with his wishes. Mr B is extremely grateful now that his estate planning is properly sorted out.
We often ask our young clients if they have a valid will. The facts are that only 23% of people between 18 and 34 years of age have a will. Many of them are successful business owners and have significant wealth. It is also not uncommon that many clients in this age group would have failed relationships. If a person without a will dies leaving a spouse and children of that relationship, in NSW the entire estate passes to the spouse. It is anticipated that the children will inherit from the spouse in due course but what will be the case when the spouse forms a new relationship?
We have seen many cases of businesses (fortunately not our clients) where the business owner has passed away leaving the grieving spouse with a business with poor systems and management, no obvious successor and the additional stress of trying to sell the business. The result is usually that the business is sold in a “fire sale” for very little. With proper planning the risk of this occurring can be minimised.
Together with our legal panel of experts the team at HCG can help you to:
Have a proper plan to hand over your business to the next generation; or
Plan to sell if there is no successor among the family or management team;
Have a power of attorney in place to make financial decisions if you are not able to do so;
Have a guardian appointed to deal with decisions about your life if you are not capable;
Have a properly structured and current will;
Understand that proper estate planning involves a comprehensive understanding of tax law in order to optimise the tax position of your beneficiaries;
Appreciate how a properly drafted will will ensure majority of the assets are passed to blood-line beneficiaries and not step-children in blended families;
We help our clients to deal with the matters of succession, death and taxes. We hold their hand during the process of reviewing their existing structures and wills to ensure the estate planning and succession planning strategies minimise the exposure of the assets to predators.
Our ultimate goal is to create peace of mind that the empire you have been building over many years will continue to provide for your family.
If you would like to learn more or discuss your own circumstances, come to talk to us and our legal experts!