Category Archives: Succession Resolution

Your final exit will it be smooth or bumpy?

In the last blog we talked about Death Cafes and how they provide an informal setting to discuss the difficult subject of how to approach death. Death is one situation where we really cannot control the outcome. But we can certainly do planning that will provide a road map for our loved ones or friends.

How do you approach that planning? Do you first go to your accountant and/or lawyer and come up with a plan? That is certainly one way to get the ball rolling but what about some of those softer issues. The lawyers and accountants can provide the technical expertise but this may still lead to family riffs. Is it better to talk out these issues with family members in the room? Of course, but communication is not easy for everyone. Without any plan you pretty much guarantee conflict will arise. But putting a plan in place certainly helps to circumvent the chance of family fighting.

A stronger approach to avoid conflict may be to involve those that will most likely be impacted by your estate plan in the planning discussions. An estate mediator can help you with getting started on a process. They understand and know the type of issues that can become contentious. They can help implement a plan that family members can understand and accept while they are in a period of grief. The less surprise the better. So think about your plan first by considering who is most impacted when you die. Get the proper accounting and legal advice but make sure you take the time to discuss your plan with your family and involve them. You may just walk away feeling like you can control your final exit.

Succession of the Family Cottage

One of the most difficult assets to deal with is the family cottage when it comes to estate planning. When you think about it,  the cottage may contain years of memories,  children growing from toddlers to teens and then adults. The view, the serenity and the all the good times…no wonder it is hard to contemplate what will happen to this vision of Shangri La when one passes away. However, the family cottage needs careful attention when making an estate plan.

All those great memories are precisely why it is difficult to deal with or even contemplate a sale prior to death or at death. If a sale is not done, what will happen to the cottage? Here are some of the questions that often arise when cottage planning involves family members:
• Will the cottage have to be sold?
• If the cottage will not be sold what family members will be taking it over?
• Who will show on the title of the cottage?
• Will some family members wish to buy out other family members?
• What are the tax ramifications of a sale at death or prior to death? Has there been planning for any tax liability that may arise?
• If the cottage is to remain in the family who will pay for repairs and maintenance? Will there have to be a trust set up to deal with ongoing costs and payment?
• Will everyone be able to agree on what type of maintenance is necessary and if not, how will the conflict be resolved?
• How will a schedule for use be done and what if there is disagreement?

And the list goes on and on. All of these questions can lead to family disputes. How will these disputes be resolved? Can the family sit down together prior to a parent becoming incapacitated or dying and hash out these issues? Sitting down to discuss it is of course the ideal scenario and removes surprises but who will lead the discussion? Do mom and dad feel comfortable about leading that type of discussion and how will they deal with any conflict that may arise?

All of these are really important questions and tough to focus on. Feeling overwhelmed in starting the discussion is truly understandable. Seeking a person that can facilitate the discussion is probably a step in the right direction. A mediator can help you face this challenge by laying out a game plan and working through the discussion. Having no plan leaves it all up to chance which is not a great outcome – maybe it will work or maybe not! Entering into a discussion that can walk you through a process and keep you on track will lead to a plan that will help preserve the family’s most cherished asset.

Planning for the successful transition of your business

Making succession plans for your business is not an easy endeavor. For many business owners, their business is part of who they are and exemplifies years of hard work and dedication to building a successful business. Planning to transition out of that business or leaving it behind is never an easy thing to do for a business owner.

Many business owners consider bringing in family members. Some family members may already be involved with the business which may make things easier but then it again it may not. Taking a business and moving to the next generation is not for everyone even if you are born into it. That is why business owners have to think about other succession options.

There are a few steps that any business owner can take to working slowly on a succession plan. These things take time and like anything in life, careful and methodical planning will leave the already thriving business in capable hands if the right successor(s) can be found.

It is important in the first steps to determine the value of the business. This will help gauge who might want to come on board and whether they have a vision for the business in terms of continual direction. It may also help the business owner grasp how a succession plan could be created so that a smooth transition occurs. Numbers play a big part in determining where thing are headed and who will be involved.

Once a gauge has been determined regarding the value, then the business owner really needs to think about who presents the best fit to accomplish the succession of the business. This may or may not include family members. If a family member is to take over the business some of the following questions may be helpful to think about:
• Do they have experience with the business?
• Have they shown an interest in taking the business over?
• Even with experience can they realistically run the business successfully?
• How involved does the business owner want to be once the transition starts to take place? Is it a complete turnover of control or over period of time?
• Does it make sense to completely end involvement in the business? Is this a realistic outcome or is a transition over time better?
• What are the goals for the business for those family member(s) who will take over? Is that in line with the business owner’s vision or direction and where they see things headed? If not, will that cause the business owner to want to jump back in?
• Is there a concern to equalize interests among family members where some family members are involved in the business and will take it over and some are not?

Many of these questions really boil down to the soft issues. While it is important to get the numbers right and to do the right tax and estate planning, conflict can arise when some of these soft issues are not contemplated. This can lead to years of conflict and family strife if the soft issues are not faced ahead on and considered carefully. Transitioning a family member in at the end of the day may not actually be the best option.

Working through the soft issue discussions may not be easy but they are necessary. If getting the conversation started is the tough part, consider having a person, such as a mediator to help you facilitate the discussion. The mediator or transition advisor can help you work through these issues and to include family members in discussions. Once discussed, the transition of the business can happen much more smoothly.

Does the future of the court system include ADR?

For those of you who have had to use the court system for any dispute, you will know that the process is incredibly complex, long and expensive. The legal profession is on the verge of a transition looking to better its service offering and provide a different model for billing. While ADR (alternative dispute resolution) has been around for years it is not yet fully utilized. In a previous blog, we indicated that in some parts of Ontario there are programs for mandatory mediation and that estate mediation is part of that program. Despite this mandatory movement, the project has changed very little since its inception in 1999.

Interesting enough, a recent address to the Canadian Bar Association by the Supreme Court of Canada’s Chief Justice Beverley McLachlin only noted ADR once as part of the model for a changing legal profession.

For the most part the legal system is still very adversarial in nature. However, having proper and affordable access to the court process is getting more and more challenging for the public. The process is timely, costly and not all issues are best resolved by an adversarial system.

Mediation is an alternative way to settle disputes by offering more cost effective, timely and affordable avenues to resolve issues. Because disputing parties discuss the issues and generate their own solutions, the process may be far more realistic or practical than any court imposed judgment. Despite the benefits of mediation, the Canadian court system has yet to fully embrace it.

Realistically, change will have to occur since the current model of going to court to settle disputes is under stress and access to justice is dwindling. Mediation will eventually become part of the model so that the court system is better able to serve the public.

It is interesting times and for those of you facing a disputed estate issue, it is important that you know that litigation is not the only route. You have an option with mediation and in fact you can assist the very strained court system by utilizing ADR. Now is the time to look at other options. Consider this alternative even if there is no mandatory program where your dispute is.

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