Why creating your succession plan shouldn’t wait

When it comes to transferring your wealth from one generation to the next, there’s no such thing as best practice – what works for one family might not work for another. Here, we look at how you can prepare a succession plan that works for your family’s needs.

Why creating your succession plan shouldn’t wait

When should you begin planning?

Ideally, you should begin planning for a wealth transfer as soon as possible. In many cases, though, a change in family dynamics or circumstances can often act as a trigger to start succession planning. These events often include:

  • Marriage or divorce
  • Differences in opinion or ideas between family members/generations
  • Family members moving to different countries
  • Aging or the death of a family member or family friend
  • Concern over the impact of inheritance tax
  • Desire to retain the wealth within the family group
  • Concerns over equality between the second generation (your children) and the third generation (your grandchildren)

If you haven’t already begun preparing for succession, using one of these events as the catalyst to begin doing so, we can help you develop a plan for your family. This will allow you to set yourself a specific timeline for your succession plan, making it easier to share your wealth vision with your family.

Prepare yourself for the challenges

For many, wealth is much more than simply financial assets. For instance, there may be family businesses included. In that case, it’s possible that some family members are involved in the business, while others are not. This can make it difficult to decide how your wealth should be divided for the next generation.

If your wealth is dynastic and has been passed from one generation to the next over many years, this can create its own unique challenges. It’s possible the next generation might have certain expectations for their wealth which don’t match with your vision.

Overcoming these obstacles can be difficult, but it can be done with a well thought out strategy for the future. If you invest the right amount of time in planning family wealth succession, the journey can be a fulfilling one, but this won’t happen by chance.

How to overcome obstacles

The wealth transfer process is ongoing and will evolve over time. Because of this, creating a line of clear communication between generations is key. For many, family conversations can feel awkward and create friction, resulting in them being delayed or avoided altogether.

When this occurs, the younger generation may not be fully aware of the extent of the family’s wealth or the potential issues that they may face. This generation could also potentially develop their own values and visions for the future of the family’s wealth, creating conflicts in attitudes between family members.

It is therefore vital to communicate with the next generation in order to preserve wealth and the family businesses, if your family has one. The planning process leads to an understanding of each family members’ motivations and personal drivers. This will enable you to assess the direction of your vision and the options available to your family in order to create a plan for your family’s future.

Do you need help developing a succession and financial plan for the next generation? HSBC Private Banking’s wealth advisors will work with your Relationship Manager and Investment Counsellor to help create the succession plan that will work best for your family.

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