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Where There's a Will, There's What?

The Answer is that it Totally Depends on the Will's Construction

Lawyer explaining contents of a Will to familyIntroduction

The question “Where there’s a Will, there’s what?” brings to mind a series of possible answers – from the tongue-in-cheek responses such as “Where there’s a Will, there’s a relative”, to the meaningful, to the complex. We are here to deal with the meaningful and complex. Where there’s a family business in the equation, there arises a plethora of issues that the deceased person’s Will may impact on.

Truth is, family businesses have a unique set of challenges and opportunities that require careful planning and consideration to ensure the long-term success of the business and the subsequent longevity of your family dynasty. However, much or all of this planning can be brought undone in the event of a poorly constructed Will by a deceased person of importance/seniority within the family/business.

Estate planning/succession planning is an important part of any family business however, it can be difficult to get right. And let’s face it, most wealthy families are intent on getting it right when it comes to ensuring that the intergenerational transfer of wealth is set correctly. This article has been designed to help you understand the importance of creating an effective Will for your Estate. Done correctly, your Will should account for the betterment of both the family members and any other beneficiaries, as well as the family business.

What to do When Constructing Your Will

The first point to make here is that you MUST have a Will to ensure the safeguarding of your legacy. Whilst saying this, proper estate planning/succession planning goes way beyond just having a Will. Your planning must also encompass directions on how to deal with those assets that aren’t or can’t be dealt with within the terms of the Will itself.

Receiving advice from a lawyer and a financial adviserPoint number two is that it’s also wise to employ the services of both a specialist financial adviser and a lawyer specialising in sophisticated estate planning matters. NOTE: It’s vital that these two advisers are able to work compatibility with each other during the construction of your Estate Plan.

The beauty of having your legal and financial advisers working with you is that they can combine their specialised skills and knowledge to work out the best possible outcome for you, your family and your family business.

As a background to this, you may not be aware that within the realm of estate planning, recent data shows that approximately 60% of Australians have taken the crucial step of crafting a Will thereby securing their financial legacy for future generations. That’s the good news.

Nevertheless, the prevalence of contested Wills remains surprisingly high. Contesting a Will has become a common recourse in Australia, with over half of all Wills finding themselves under scrutiny. Such contests are often initiated by partners, former partners or family members. This trend underscores the need for meticulous estate planning to minimize the risk of disputes and ensure that your final wishes are executed as intended.

Who Should be Part of the Estate Planning Process?

Research shows that younger Australians feel differently about intergenerational wealth transfers than their parents. It’s startling, then, that only 17% of family offices have policies specifically focused on engaging these young people with their family’s wealth and educating them on its proper management.

So how well equipped are the next generation for the responsibilities that come with wealth? What is their financial literacy level?

Image of two young adults reading about financial literacyA study of family offices by the Private Wealth Network, published in March 2022, found that young people aged 18 to 35 universally believed that mentorship from the previous generation would better prepare them to manage money.

Others wanted more direct experience and training. The study found 39% of this age bracket wanted to observe how their families actually manage wealth, 35% wanted on-the-job experience through board roles, while 32% wanted board director training to prepare themselves.

In light of this, it’s promising to see that more than 50% of 18- to 35-year-olds are already deeply involved with their family’s wealth strategy.

Even so, there is still some trepidation within the next generation. The Private Wealth Network study found that 29% of 18- to 35-year-olds want to forge their own paths with respect to their family wealth. And 14% of the cohort said they felt “burdened” by their families’ wealth.

This suggests there’s still scope to better engage with the next generation to both educate them and address their fears.

Addressing the challenge

Anticipating this challenge, many families are turning to trusted advisers for guidance and support. As many as nine in every 10 families say they rely on the input from an external adviser. These advisers vary in expertise and skill set, ranging from trained professionals with deep experience managing money to long-term family friends.

So, who do Australians rely on?

Source: RFI Global Survey

Thankfully, it’s not only the patriarchs and matriarchs taking the advice of those around them. Many families are introducing the next generation to their own professional advisers in the active planning stages. A primary motive for this is that these introductions can help build lasting relationships and give the next generation an insight into the services and support each adviser can provide, plus an indication of their responsibilities as custodians of family wealth.

Although building these networks early can better prepare the next generation to inherit wealth, some families may require additional, more tailored guidance. As such, many families will compile a series of documents designed to serve as a single source of truth regarding their wishes for the future. These documents may be physical or digital but are designed to answer any questions or settle any disputes the heirs may have regarding the distribution of the estate. It is vital that the relevant parties know precisely where these documents are being kept.

These often include, but are not limited to:

  • Your Will and other important estate planning-related documents such as Powers of Attorney and Advance Health Directives
  • Account details (personal and business)
  • Trust Deeds
  • Passwords and PINs.

 

Finally, most will be sure to appoint an appropriate executor(s). This decision needs to be treated with the utmost care. The people appointed to this role have significant responsibility and control over your fortunes and should be people you trust to understand and act on your vision with absolute integrity.  

Summary - "Where There's a Will"

We hope that by now, you have a much better understanding of the importance of what the ideal process is for preparing a Will and why it’s so important for family businesses. If you’re still having trouble making sense of all the information we’ve given you here, we encourage you to first talk with an experienced estate planning adviser about how they can help you achieve your succession planning objectives.

How FBA Can Help You With Your Estate Planning (Wills, et al)

At Family Business Advisory (FBA), our purpose is to help family businesses succeed on a sustainable basis. As such, we provide you with access to specialist family, business and technical services with a goal being to generate opportunities for families in business.

In order to complement our own particular specialised skills, over the past several decades, we have developed a network of trusted, professional advisers in such areas as:

Image of Services spectrum

Moreover, we work at all times to give you peace of mind and proactive support to help navigate any changes in the market brought about by legislative changes, geopolitical events and general market conditions – all to maximise your personal wealth and security.

These services are provided by FBA, in association with the Wealth IQ Group.

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