Succession planning is a key part of most individuals' lives and takes many different forms, depending on their circumstances, including:
- Ensuring wealth is passed on to future generations tax efficiently
- Planning how and when to pass on or exit a business
- Making sure families are provided for if something happens to an individual
Whilst succession planning is an important part of one’s financial plan, often we can be so focused on the here and now that we struggle to make time to give this thought. This can lead to greater pressure when addressing it later down the line, to plans being rushed meaning we don’t get the best possible outcome or, in a worst case scenario, to this area never getting addressed.
Often succession planning can be an emotional conversation to have, as it can involve planning for when we are no longer here, or perhaps discussing exiting a business that may have been a major part of our lives.
However, by preparing earlier and taking the time to discuss your succession planning, you ensure that you are able to put in place a suitable strategy which aligns to your needs, aims and objectives.
As we know, family and business dynamics can often be complex, meaning succession plans need to be detailed and take account of your individual circumstances.
Because of this complexity, it can be difficult to visualise how our planning will look in reality and the impact this will have on you, your family and/or your business.
To assist us in advising our clients on succession planning, we often use cash flow modelling software, which allows us to ‘paint a picture’ of their succession plan.
Through inputting some basic information regarding their circumstances, including income, expenditure, assets and debts, our cash flow modelling software can project their financial position and show how the decisions they make today will impact theirs and their family’s financial future.
The software allows us to model various different scenarios, to help in devising an appropriate succession plan, which might include:
- Can I afford to gift money to my children?
- What age can I afford to exit my business?
- Do I have enough protection in place to provide for my family if something happens to me?
The software is based on well researched, detailed assumptions, and whilst the results cannot be guaranteed, they provide a good grounding upon which to build your plan.
If you are interested in seeing how cashflow modelling can help you, please contact Andy Hogarth.