The overriding objective when undertaking succession planning for the family business is ensuring a smooth transition of wealth to the next generation while maintaining harmony and ensuring that the business survives unscathed.
In a non-planned situation, a family-owned business can easily fall into a survival trap.
To grow a family’s wealth and pass it on to the following generation for their stewardship can often mean that the next generation must be given the opportunity to take risks and pursue new directions for growth. In this context, the possibility ofdiversifying assets through a sale or strategic alliance should be considered.
A successful intergenerational transfer of wealth may or may not involve the transfer of an operating business to the next generation. The family should also take into account not just financial capital, but also:
human capital – the individuals who make up the family including each member’s ability to find meaningful work;
intellectual capital – the knowledge gained through the experiences of each family member and the ability to share what they know;
and social capital – the family members’ relationships with each other.
What can go wrong?
Studies have shown that the main causes of wealth transfer failures are:
breakdown of trust and communication within the family;
failure to prepare heirs for responsibilities;
other causes, such as a lack of a family mission and vision as well as errors in or lack of proper accounting, legal or financial advisory planning.
The best chance for a successful continuity plan is to have your advisors work together over time to address the issues.
But at the bottom of it all, business continuity planning requires the setting of clear objectives, agreement, good communication, recognition of risks and timely action.
Proper governance in your organizational structure will help the group make decisions. The governance of a family business is more complicated than that of anordinary company because of the central role of the family that owns and leads the business.
Ongoing planning
As the business matures, wealth management becomes a more pressing issue than during the initial wealth-creation phase of the business. The family must decide if they wish to remain connected through management of their wealth or to pursue their own separate destinies. Typically, some will wish to stay in the business, others will want to pursue their own interests.
Continuity planning for family-owned businesses usually brings together professionals from diverse disciplines, including your lawyer, accountant and possibly financial planner.
The Family Office
A family office may be useful in this process. In an appropriate situation it can provide:
family meeting co-ordination;
development and maintenance of governance structures;
conflict prevention and conflict resolution;
tax, estate and financial planning;
wealth transfer planning;
asset protection and risk management;
investment consulting, monitoring and performance measurement;
financial recordkeeping, compliance and consolidated reporting.
For families with a strategic approach to wealth management, a family office can perform an important function for the maintenance of their long-term wealth across generations.
The overriding objective when undertaking succession planning for the family business is ensuring a smooth transition of wealth to the next generation while maintaining harmony and ensuring that the business survives unscathed.
In a non-planned situation, a family-owned business can easily fall into a survival trap.
To grow a family’s wealth and pass it on to the following generation for their stewardship can often mean that the next generation must be given the opportunity to take risks and pursue new directions for growth. In this context, the possibility ofdiversifying assets through a sale or strategic alliance should be considered.
A successful intergenerational transfer of wealth may or may not involve the transfer of an operating business to the next generation. The family should also take into account not just financial capital, but also:
human capital – the individuals who make up the family including each member’s ability to find meaningful work;
intellectual capital – the knowledge gained through the experiences of each family member and the ability to share what they know;
and social capital – the family members’ relationships with each other.
What can go wrong?
Studies have shown that the main causes of wealth transfer failures are:
breakdown of trust and communication within the family;
failure to prepare heirs for responsibilities;
other causes, such as a lack of a family mission and vision as well as errors in or lack of proper accounting, legal or financial advisory planning.
The best chance for a successful continuity plan is to have your advisors work together over time to address the issues.
But at the bottom of it all, business continuity planning requires the setting of clear objectives, agreement, good communication, recognition of risks and timely action.
Proper governance in your organizational structure will help the group make decisions. The governance of a family business is more complicated than that of anordinary company because of the central role of the family that owns and leads the business.
Ongoing planning
As the business matures, wealth management becomes a more pressing issue than during the initial wealth-creation phase of the business. The family must decide if they wish to remain connected through management of their wealth or to pursue their own separate destinies. Typically, some will wish to stay in the business, others will want to pursue their own interests.
Continuity planning for family-owned businesses usually brings together professionals from diverse disciplines, including your lawyer, accountant and possibly financial planner.
The Family Office
A family office may be useful in this process. In an appropriate situation it can provide:
family meeting co-ordination;
development and maintenance of governance structures;
conflict prevention and conflict resolution;
tax, estate and financial planning;
wealth transfer planning;
asset protection and risk management;
investment consulting, monitoring and performance measurement;
financial recordkeeping, compliance and consolidated reporting.
For families with a strategic approach to wealth management, a family office can perform an important function for the maintenance of their long-term wealth across generations.
DioGuardi offers solutions for tax problems such as:
Unreported income
Unfiled tax returns
Payment arrangements
Unpayable tax debt
Tax dispute litigation
Criminal tax defense
Wills, Estates & Trusts
DioGuardi Law offers these will, estate and trust services for individuals and business-owners:
Wills
Preparation of trust agreements
Powers of attorney
Estate administration
Probate
Representation in estate driven litigation
Real Estate
DioGuardi Law can assist you with all your real estate needs including:
Newly constructed/Resale
Purchases and Sales
Title transfers
Leases
Private mortgages
Refinancing
Condominiums
Vacant land
Tax Debt Relief
When your tax balance is too large to be affordable, DioGuardi Law can protect your home, your cash flow and your financial assets from the Taxman. It is essential that we begin planning a strategy before the CRA registers a lien against your properties or seizes financial accounts, and before you engage with an insolvency trustee.
Business & Tax Planning
DioGuardi Law has the experience to provide:
Resident and non-resident corporate restructuring
Optimum use of holding corporations
Continuity and succession planning
Tax-free transfers
Losses and ABIL planning
Making interest tax deductible
Small business planning
Corporate & Commercial Law
DioGuardi Law have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:
Incorporations and corporate governance
Corporate reorganizations and transactions for the directors and shareholders
Negotiation and drafting of agreements, professional corporations, minute book maintenance
Brigitte DioGuardi
B.A., LL.B
Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law. Fluently bilingual in English and French, Brigitte has broad experience in the areas of:
Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.
Paul DioGuardi
B.A., LL.B, KING’S COUNSEL, SENIOR COUNSEL
Paul obtained his Law Degree from Queen’s University in 1964. He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:
