and as your children age.”
One issue that owners will grapple with is treating all their
offspring fairly. “There is a big difference between equal and
equitable,” Fitzpatrick says.
There are also numerous ways to ensure all the kids are treated fairly even if they’re not going to be involved in the running
of the business, he adds.
“Owners will need a will, estate planning expert, and they
may need a trust,” Shiff says. “There may also be a spouse in-
volved. Do profits go to this person?”
Determining what the lay of the land will look like in future
takes time, he adds. “It’s not something you do in one meeting.
These are life decisions. It affects how everyone lives.”
That means everyone should be involved. A family council is
one option, Walsh says.
According to a report prepared by Family Legacy Asia (HK)
Ltd., a business consulting firm based in Hong Kong, a family
council is a separate forum for discussion of issues — typically,
those dealing with a conflict or potential conflict between the
family and the business.
“Another, perhaps slightly different way of thinking about
the family council, is to think of it as being the leadership team
responsible for improving the health of the family system,” author Christian Stewart, managing director of the organization
and formerly a tax partner at PricewaterhouseCoopers LLP in
Hong Kong, says in the document, entitled Preserving Family
Wealth & Unity Through A Family Council.
Walsh also recommends a one-on-one approach for advisors.
“I meet with each family member individually and their spouses
and children,” he says. Notes from those meetings are shared
family business owners
in canada are postponing
retirement, according to the
BMo retirement Institute
in Toronto.
Two key factors are at play
in keeping small business
owners over age 45 working
longer, the 2009 report found:
a unique attitude toward
aging and work, and a global
economic downturn.
forty per cent of
respondents were revising
their retirement date as a
result of the recession. That
doesn’t mean that they have
a plan for the business when
they finally do exit. one in
five business owners surveyed
admitted they did not know
what will happen to their
businesses when they retire,
and only nine per cent have a
formal succession plan.
The shift that is destined
to occur when baby boomers
retire and a new generation
takes over private company
ownership will not be smooth,
according to a report released
last year by the canadian
financial executives research
foundation in Toronto.
with the owners and a draft strategy drawn up. “Together we
develop a succession plan.”
Getting family members to open up about money can be dif-
ficult, says Fitzpatrick. “People are far more willing to stand on
the street corner and bare their soul than they are to talk about
finances. Communication is critical.”
As a professional advisor, you need to get all the facts to help
develop a succession plan that will work — and that means getting
people to open up, Shiff says. “People need to be candid with you. I
often say: ‘In a perfect world, what would you like to see?’ ”
“There is a big responsibility from the lawyer’s and accoun-
tant’s position to gain the trust of the entire family. You can’t
divide your professional loyalty,” Fitzpatrick says. “You need to
remind the family you are the lawyer or the accountant for the
business, not the family.”
Shiff also advises using language that is more neutral. “Suc-
cession plan” can be an emotionally charged phrase for every-
one involved. “Call it a blueprint,” he says.
“It’s really exit strategies and business continuity,” says
Walsh. “Those are better terms.”
The lexicon has to be familiar to everyone in the family,
which means owners also need to discuss these issues with their
kin. “If they haven’t, you’ve wasted a lot of time,” Shiff says.
“This is when the family begins to fight. The more that is at
stake, the more they fight.”
At the end of the day, he says, owners need to decide what is
best for their business moving forward and accept the fact that
they will not always be at the helm. “Generally speaking, it’s
difficult to run things from the grave.”
A solid succession plan means they won’t have to. END
