In our last blog, you learnt about the importance of succession planning, which is about why you should transfer your business to the next generation.
Now that you’re aware of the “why,” this blog focuses on informing you about how you can plan the transfer of your business. In other words, we will talk about the effective ways you can apply for succession planning.
Before we begin, here’s a little heads-up as to what happens to families who do not transfer their wealth to the next-gen. According to recent academic studies, only about 30% of intergenerational transfers are successful. The unsuccessful rest are the result of poor planning, the absence of a common vision, and a lack of communication.
This blog tells you about one effective way to plan the transfer of your business that leads to a smooth transfer of your wealth to the next generation. Read on.
Always look at the bigger picture of succession planning
Transferring your life assets to the next generation is what’s referred to as succession planning. Your wealth and assets are your legacies, something (that’s your everything) to leave behind for your family after your death.
The matter of transferring your business to the next-gen becomes more crucial and worth proper planning when you consider the end goal of your estate plan. It is not something to be viewed from the perspective of a decision to be made regarding one’s death. The goal becomes clearer when you look at the outcome of estate planning.
Understand the whole process along with the need of the matter - controlling the beneficiaries, amount of wealth, and the time of asset distribution among the next generation. All of this is only possible when you have a refined structure for succession planning.
The need & aim of transferring your business to the next-gen
Take a look at these four fundamental principles of estate planning:
- Consider your lifestyle needs - It is essential to account for your personal lifestyle needs to never worry in the future about lack of money.
- Secure your estate till the end - Plan an investment strategy customised to meet your lifestyle.
- Protection from taxes and other expenses - Ensure that your assets are protected from any possible erosion from taxes or other expenses.
- Plan your asset distribution - Identify and execute an asset distribution strategy that is tax effective and allows your beneficiaries to receive the assets meant for them.
Here’s what you should do to transfer your business to the next-gen
Structure a Will & Testament!
This is the first and one of the most effective plans to transfer your business to the next generation. However, you need to ensure that this document is not separated from your overall estate plan.
In your Will, you can mention the maintenance obligation, matrimonial property regime, duty of support, etc., alongside the beneficiaries, executor, and time of asset distribution.
What happens when you draft a Will?
Drafting a valid Will & Testament, you can assign a trustee as your executor, appoint a testamentary trust for the assets meant for any minor beneficiaries or special needs of your children, nominate heirs to your property, and create special bequests.
Additionally, you can also structure your Will in a way to reduce estate duty and maintain sufficient liquidity to make up for estate costs.
Creating a Will while considering your lifelong assets can be overwhelming. That is why hiring professionals for that matter can go a long way. We’re here to take care of all your Will-related queries and needs. Need help drafting your Will?
You can rely on our legal team to assist you from the beginning till the end of the Will-making process. There’s nothing to worry about a thing!
AasaanWill Zaroori Hain!