THE TRUST, IDEAL WAY FOR AN ADEQUATE SUCCESSION PLANNING WITHIN THE FAMILY BUSINESS
Nowadays, it is increasingly more common that those who head family-based business groups pause for a moment the intense everyday work to reflect on the importance of designing and implementing an adequate succession planning that ensure, on the one hand, the continuity of its business project, and on the other, the participation and the work of the succeeding generations to achieve that well deserved continuity.
This planning involves a large number of elements that will be important to know, evaluate and intertwine properly for a successful succession. Some of these elements are: the involvement or not of the members of the family in the management of the company, the personal and professional circumstances of each member of the family, the age, experience, scholarship and professional development of each of them, the possibility that the family extends to relatives beyond direct ascendants or descendants in a straight line, the preparation of family or business assets for more efficient distribution and management, the need for a corporate governance which incorporates the best practices with the participation of independent professionals, the periodic distribution of resources to beneficiaries that is consistent with the will of the founder or founders, the formulas that promote and encourage the work and involvement of the succeeding generations and avoid disinterest and behaviors that may demerit the value of the company, the criteria for a prudent management of the family businesses, as well as the mechanisms and legal structures that ensure a better, faster and efficient distribution of assets and a better management of the companies at the death of the founders and the generations that succeed them.
With the support of other legal instruments such as wills, family agreements, shareholder’s agreements, mandates, proxies, donations, etc., the ideal instrument in order to achieve the integration of each and every one of the abovementioned elements, is the trust. The trust has the great advantage of being a flexible instrument that allows incorporating practically all the wishes of the founder or founders of a family business and it facilitates the faculty to regulate in detail each one of the many peculiarities of the business-family group. Each company and each family has their very particular characteristics that makes them different from all others; which is why they require a legal figure, such as the trust, that can be adapted to such circumstances, adjust them as “a tailor-made suit”, and especially, give the tranquility and security to the founder or founders that their instructions will be executed by an independent third party to ensure that their wishes are fulfilled in the best possible way for the benefit of their successors and of the business group itself.
At Acedo Santamarina we have proven expertise in planning succession through trusts for family businesses. We also advise families in the planning, documentation and execution of structures that ensure compliance of the wishes of their founders and the forthcoming of their companies, but above all, the protection of the family and the care of their future.