Business or family will? Defeating paralysis
'I have been in countless situations over the last 32 years in finance, where the most undeserving person in the family or business has been expecting every penny that was available, and received nothing.'
ABOVE my late father-in-law David’s computer he had a little sign, which said: "Procrastination is my greatest sin. Maybe one day I might do something about it”.
There is no greater procrastination than that of making a family will or a business will. But if the business owner was faced with the chaos and disruption that may inevitably value the business as nothing, might they be more inclined to do something about it during their lifetime?
The emotions around this column relate, as much to the business will as to the family will/decisions.
Business owners are often faced with either ‘fishing like mad’, because the fish are biting, or ‘fishing everywhere they can’, because they are not’.
The thought of putting the rod down to decide what you will do with your fishing gear when you are no longer here, is as appealing as a cardboard licking competition.
There are often many issues, which cause paralysis in the mind of the business owner: Do I leave it to my children and which one if I do, and how much to each? Will one expect more than the other? How will my team respond if I leave it ‘disproportionately’, or even to my children at all?
Such decisions can create significant emotional distress, and the primitive part of the brain that deals with emotion can ‘protect’ you by telling you to ‘deal with it later’ creating paralysis. That is the moment you read over the same paragraph five times and make another cup of tea.
Worst case scenarios can trigger action to take care of that, so let’s look at them:
How many times during our lives do we sit in bewilderment at colleagues or family member’s complete misunderstanding of an event or even their thought process?
How can they have become so deranged as to think that way? Its no secret that personality disorders such as narcissism, psychopathy are on the rise, whilst society in itself seems more focused on ‘selfies (being in the photo)’ than the item, they are taking a photo of.
It is possible later, that those pouting photos will look as daft to you as they do to people around you now.
I have been in countless situations over the last 32 years in finance, where the most undeserving person in the family or business has been expecting every penny that was available, and received nothing.
This is dangerous in a family, but really so in a business as they can bite their nose off to spite their face.
If this is the case when we are alive, what might it be like when we are not there to influence it?
A business with borrowing is at the control of the bank. After a bereavement of a senior member of staff, the bank will see there is no continuity plan, that there is disruption, and there is no longer the skill set of the deceased.
No-one loves a business or works harder than the owner. No bank, however, is blind to the inevitable failure of a business as described above and they will rush to protect their assets as quickly as is possible.
Step one is to have what we call the courageous conversations in the house/business. This will cause disruption potentially, but that’s why they are called ‘courageous’. Go in with a clearly defined outcome and leave that primitive part of the brain (emotion) asleep.
It’s possible you may have to bring some outcomes forward, but that’s always good.
What would you like to happen in the event of death, an illness? Who should run the company? Do they have the skillsets? What do the others think? Are there particular items you would like to leave to anyone? Do you want to leave shares to someone or just an increased position in the company and leave the shares to the family for the Inheritance tax break that this allows?
This will lead to many choices on training and up skilling to ensure peace of mind with the bank and also for your self.
There is no accounting for the benefit of a clear mind when you are running a business knowing it is secure no matter what.
More next week on protecting these assets from the bank.
Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you have a question on business or family protection call Darren McKeever on 028 6863 2692, email email@example.com or visit www.wwfp.net.