Successful long-term planning requires an understanding of your personal goals and objectives, as well as specialist knowledge across corporate, tax and trust laws.
“It’s a huge topic and one that in my view, needs to be planned properly with the involvement of the family,” says Canterbury Property Investors Association (CPIA) president Nigel Barker.
“It starts with a conversation that follows the recognition that you are not going to live forever. “Asset and succession planning is a significant issue for many investors. The successful transfer of wealth from one generation to the next often starts years earlier.”
Areas for consideration include:
• asset and governance structuring
• trust structuring
• wills and powers of attorney
• relationship property agreements
• facilitating family meetings/psychologist input
• mediation and alternative dispute resolution structures
“Asset structuring is an important aspect of this and is about ensuring your property is held in the most appropriate legal structure to achieve your life’s objectives. It is as important to the new business owner as it is to the head of a 3rd or 4th generation multi-million dollar family enterprise. Successful long-term planning requires an understanding of your personal goals and objectives, as well as obtaining specialist advice across corporate, tax and trust law,” says Nigel.
Seek professional advice
“It is important to work closely with your professional advisers to devise a plan that works to achieve your wishes, goals and objectives. Also, understand that things can change for you and family over time. If and when things change, seek a review of your investment and succession plans and make any necessary adjustments, so you can continue to focus on the things that are important.
“Think about which of your children has the skills, ability and willingness to manage the investment portfolio. Questions to consider are:
• How will they be paid for the work?
• Can they count on the support of their siblings?
It may surprise you to learn that many high wealth families employ the services of clinical psychologists to help analyse and determine how the family dynamic can be managed to facilitate succession planning. Structuring your property investments is vitally important.”
Nigel adds that trusts and companies obviously play a vital role as these entities can survive death of an individual, so the governance of these structures is critical. “Address whether there needs to be independent directors and trustees engaged to support family members to run these businesses? Ensure there is a clear memorandum of your wishes laid down to give independent trustees guidance on what your wishes are.
Fairness & mediation
”If there are issues of fairness to address within the family these are best discussed formally and openly. A family mediator may be necessary.” He says such discussions could lead to the creation of a Deed of Family Arrangement (DOFA) to try to ensure the family are involved in the planning of what comes next.
“Succession arrangements are so important for property portfolios. Planning a DOFA is a journey. It may take a decade to construct, and it may need to evolve over time as the family expands, spouses join the family, and circumstances change. It’s a conversation that needs to continue. “If the conclusion ultimately is that dying with too much land is a curse for the family, make the call early so that you can make an orderly divestment to cash. Of course, consider how you will manage the wealth that is held in cash rather than property. Establish who will advise you on this and build these relationships early on in your life’s journey.”
Canterbury Property Investors Annual General Meeting, 29 July
Head along and find out how the organisation operates.Join the CPIA for advice and events that keep you up to date about property and help you learn about how to manage and find your future property goals. 7pm, at 22 Buchan St, Sydenham
