3) How will remuneration for various active members be decided? 4) How do you decide who becomes a senior leader such as the CEO in the organisation? 5) Will non-working family members have a stake in the ownership? If so, how will this work? Will they have any decisionmaking powers? 6) What happens if family members have an issue outside of the family business? What impact will that have on their ability to work together? Having a decent infrastructure for the management of the family within the business will make it much easier to prepare for succession planning. Then one can turn their hand to more practical considerations, such as how to practically transfer control or shares within a business that is efficient and tax effective. The tax implications often play a key role in deciding upon succession plans. Having a good governing protocol means that is likely that tax considerations have already been factored in and therefore the impact is not as significant as it could be. In your experience of advising on succession for families with businesses, what are the most common issues that arise? A family-owned business will be very much like any other business when it comes to the operational aspects. The nuisance is that family dynamics and politics often drive and even dictate the direction of a business. The Institute of Family Business suggests that over 87% of the UK’s businesses are family-owned but less than 45% have any sort of succession planning in place. Addressing difficult questions as above will mean that tragedies such as the Yung Kee family are prevented. When the founder of this roast goose restaurant company died, his two sons disagreed on almost everything and unfortunately ended up in 32 LAWYER MONTHLY JULY 2023 court. The company was wound up and as you can guess, there is now a huge divide in the family. There was absolutely no succession planning in this case and the implications were dire. Often, personal succession planning and its impact on the family business get overlooked. When you are drawing up your will or thinking about whom to award a power of attorney to, it will be important to ensure that your stake in the family business is yours to gift as you want. Special clauses within shareholders’ agreements may direct how your shares are to be dealt with, thus preventing the gift in your will from being realised. Also, it may be perfectly fine for your spouse to have a power of attorney over your personal assets, but a poorly drafted power of attorney may inadvertently give attorney rights over your business role too, something that may be completely inappropriate. The marriage of a family member with an ownership stake is also one of those conversations that clients shy away from. In the unfortunate event of a divorce, the
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