The TV show Succession sheds light on the importance of estate planning, particularly when it involves a family business. This cautionary tale emphasizes the need for a solid estate plan and a succession plan for business owners who haven’t made one yet.
Succession delves into the aftermath of the illness and demise of Logan Roy, the charismatic founder of a New York Media company. Real-life situations can gain valuable lessons from the events depicted in the show:
Lack of Succession Planning: Logan’s stroke leaves him incapacitated, revealing his failure to establish a clear succession plan for a smooth business transition. His third wife, Marcia, is given two votes on the trust to decide the successor after his death. Without a proper plan in place, family conflicts may arise in similar scenarios.
Impact of Founder’s Involvement: The business is strongly tied to Logan Roy as its founder. Even after suffering a stroke, Logan refuses to resign. When Logan passes away, the company’s share prices plummet. Failing to prepare for their own mortality or ensuring a gradual transition can significantly impact a business in the face of the owner’s death or incapacitation.
Marital Complexities: Many of the conflicts in Succession stem from Logan Roy’s three marriages. His three children from his second marriage rely on a holding company that was granted to their mother after the divorce to retain influence over the company. They harbor distrust towards Logan’s third wife, Marcia. Divorce and remarriage often complicate estate and succession planning, potentially jeopardizing inheritances or stakes in the family business.
What is Business Succession Planning?
Business succession planning involves appointing leaders and key individuals to critical roles in a company in the event of death, career changes, or divorce. A comprehensive plan may also cover the transfer, sale, or liquidation of the business. Triggering events like death and divorce can initiate processes such as business buyouts or liquidation through agreements like a “Buy/Sell Agreement.”
Business succession planning, estate planning, and divorce are closely intertwined. Family businesses require plans that outline actions in various scenarios, including death, divorce, or the departure of a business partner. A well-crafted business succession plan should provide for heirs and account for the costs of a potential buyout. Each situation is unique, and the level of family control and involvement in the business varies case by case.
At the The Family Law and Estate Planning Center at Amaral & Associates P.C., we offer comprehensive services for families seeking to implement plans that address potential impacts on their business or wealth. In the event of a divorce or second marriage, families may need to reconsider their business succession plans. Contact our experienced family law and estate planning attorneys to learn more about creating a comprehensive estate plan and business succession plan for your business.
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