One would think that people who are successful in their businesses would be equally successful in protecting their wealth for future generations. However, the average successful business owner (a difficult breed to find in these times) is not well prepared to face the challenges of protecting their wealth for future generations. In fact, many of those who have planned for the succession of their businesses rarely have the plans carried out. Seldom do they convey the story of the trials and tribulations of starting and running the business so future generations can benefit and understand the older generations’ values. Trust and estate planning that has been done is very out of date and rarely have the plans been updated for changes in the law and changes in personal situation, which virtually guarantees disaster. The been planned have not been implemented to a  large degree.

This is of great concern considering that studies show that there are more business owners who want to exit than ever before, yet less than 4% make it to the fourth generation,  The old adage ‘shirtsleeves to shirtsleeves in three generations’ is becoming more and more true.  It would appear that the most important issues facing most business owners are strategic business issues and family issues. Many of the entrepreneurs are failing to keep their succession plans up to date and many of the plans are greater than three years old. Considering that the tax laws alone have changed several times and are most likely to change again in the relatively near future, this does not bode well in making sure the plans will work the way they must when the time comes to act on them. In surveys taken of the wealthiest families, this is most alarming as many of the respondents cite life-changing events, such as death, birth or divorce having occurred, yet their plans have not been updated. This could be a costly mistake for the initial generation as well as future generations. It is necessary to have a competent advisory team to deal with the myriad of issues that families face today. Maintaining family cohesiveness and having plans that accentuate families’ staying together should be the mantra rather than developing plans that will tear them apart. Families who have set down their goals and objectives, particularly those with significant wealth, are far and away ahead of their counterparts who have not so planned. Improper planning or failure to take into account family dynamics and families’ history could lead to tension, which is never what they intended as they were growing the wealth. It may also be advisable for the older generations to write down the story behind the creation of the wealth and share that in a family meeting so an understanding can develop. Engaging a team of advisors to properly counsel the family on the issues they can or may face is essential to avoiding disaster and have things go the way you have planned.

Many people feel that these issues are too difficult to deal with. However, dealing with the now is much less costly and takes much less emotional toll than ignoring those issues. Many clients are aware and are not counseled to seek help in dealing with the issues that exist. All the issues – financial, tax, legal and emotional all must be dealt with to ensure that the plan has any chance of success.