Approximately one third of all family business owners are over 60 years old. This is one of the factors that will contribute to record levels in the coming decade of changes in business ownership and management. Closely held businesses currently represent the most potent segment of the American economy. This is just one of the reasons Succession Planning is a major issue for many family businesses.

Succession Planning involves the transfer of family resources from one generation to another in a manner that optimises the family's overall resources. This requires a long-term strategic plan and regular reviews in the short-term to ensure that the constant changes to taxation and related laws are considered. Different aspects of (estate)/succession planning become important during certain stages of a person's life, for example, when establishing a career, having children and accumulating assets. However, the sooner (estate)/succession planing is undertaken, the better.

Tax planning may minimise the impact of tax both before and after death by ensuring that appropriate structures are in place, for example, family discretionary trusts, superannuation funds and testamentary trusts established in a will.

The consequences of ineffective succession planning are well known:

• Erosion of wealth from estate settlement costs.
  
• Disputes among surviving owners, family members and the estates.
  
• Lack of smooth leadership transitions.
  
• Loss of productivity.
  
• Loss of jobs for loyal employees.

In short, the economic value of the business can be eroded or eliminated and the lives of owners, employees and their families can be severely impacted when succession planning is not:

1. Addressed at an early stage; and
   
2. Developed and nurtured on an on-going basis.

Successful succession planning is a blend of art and science. On the one hand, there are the business, estate, legal and tax considerations. They address important facets of the business as well as the owner's personal financial situation. These might include the value, survival and growth of the business; retirement; and estate and tax issues. On the other hand, all the technical and strategic considerations will not be considered if their personal wishes, desires and objectives of the business owner are not addressed and integrated into a viable plan.

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