What Can Succession Teach Us About Estate Planning?

The award-winning HBO drama Succession has finally come to an end. Over the course of four seasons, we’ve seen self-made billionaire and master-manipulator Logan Roy, played by actor Brian Cox CBE [pictured], repeatedly play his children off against each other – and as insufferable as each character was, you couldn’t help but become increasingly invested in finding out who would inherit the Waystar RoyCo empire.

In the series finale we finally got the answer, and if you haven’t seen the show then we don’t want to spoil the ending for you… but believe me when I tell you that it truly is a masterclass in how not to plan your estate.

And we’re equally keen to stress that you definitely don’t need to be a billionaire or the founder of a media conglomerate to get your affairs in order.

There needs to be a plan

When Logan passes away suddenly, everything descends into chaos. You’d think a man of his wealth and status would have a robust succession plan in place. If not for his children, for his businesses at least.

When his executor finds a handwritten note which appears to identify his second eldest son, Kendall, as the chosen successor, the other siblings insist their brother’s name had been crossed out. Kendall proposes it had in fact been underlined.

Sibling rivalry is a common theme throughout the show, largely due to uncertainty over who will win out, and this isn’t uncommon – irrespective of whether it’s a billion-dollar empire or a 4-bed semi and a cash ISA at stake.

By putting your wishes in writing, we can often reduce the chances of family fallouts when you are no longer around to face the music. It’s usually a good idea to talk to executors and beneficiaries about your plans before you pass away, though this might not be practical in every case.

It’s also wise to select a power of attorney. This is someone who’ll manage your assets if you become incapacitated or unable to make your own decisions independently. And don’t forget to lay out your wishes for end-of-life care.

Giving with a warm hand rather than a cold one

The phrase ‘giving with a warm hand rather than a cold one’ highlights one of the most important aspects of good estate planning: spending.

There’s something to be said for passing money down to the next generation when they need it most. If you had children in your early 30s, they’ll hopefully be reaching retirement age by the time they inherit your estate. Receiving an inheritance in later life can offer additional security and greater standards of care, but financial windfalls tend to be more life changing when we receive them earlier in life.

And with interest rates and the cost of living on the rise, many young people today depend on older generations to achieve those financial milestones that, previously, it wasn’t quite so hard to achieve.

From a purely financial standpoint, gifting can be tax efficient too — but some forward planning is required to ensure inheritance tax (IHT) won’t be payable further down the line.

The UK operates a seven-year gift rule, which states that if an individual gives away an asset more than seven years before they pass away, it will be exempt from IHT. This can be one of the most effective ways to mitigate IHT, as making gifts during your lifetime can reduce the value of your estate and potentially reduce your IHT liability.

In each tax year you can give a gift of up to £3,000 without IHT being payable, and there are further exemptions for anyone wishing to give generous wedding gifts to their children or grandchildren.

Not only does this make their lives easier, but you also actually get to see them enjoy your wealth.

Have faith in trusts

For all his succession planning flaws, there’s one element of estate planning that Logan didn’t neglect: trusts. The Roy Family Trust is talked about on several occasions.

Trusts come in multiple shapes and sizes, offering a number of benefits. You can use them to hold various assets and pass money to the next generation as tax efficiently as possible.

An additional benefit is the ability to dictate when your beneficiaries can access the assets you leave behind. So, if you’re worried about your children’s ability to manage their inheritance, you can add conditions to the trust such as only giving them access when they turn 25, for example.

Equally, sometimes an outright gift to a family member might not be appropriate, so holding investments in a separate company – a ‘Family Investment Company’ (FIC) – might be a good alternative option. An FIC enables you to benefit from lower tax rates on investment income and gains, and the timing of tax liabilities on the distribution of funds to shareholders can also be managed.

Using money for freedom

But there’s more to financial planning than material gifts and financial windfalls — even if you’re wealthy enough to bankroll your children’s entire lifestyles.

During Shiv Roy’s eulogy at Logan’s funeral, she recalls how her father would yell at her and her brothers for playing too loudly while he was doing business.

“He kept us outside,” she says. “But he kept everyone outside. When he let you in – when the sun shone – it was warm.”

Kendall goes on to describe his father as a “brute”. Perhaps even Logan would’ve been disappointed with the legacy he’d left behind.

Helping clients build tax-efficient portfolios and fund their children’s education is only part of what we do here at Forth Capital.

We might also take on the role of confidante, listening to our clients’ more personal financial struggles and helping them to make better decisions – sometimes encouraging them to focus less on the abstract numbers and more on the peace of mind and satisfaction that achieving their goals can afford them. After all, there’s no point in focusing exclusively on accumulating wealth if it doesn’t encompass your wider goals in respect of family, passions, and emotional wellbeing.

Personal assistants, private jets, and even political power. From the outside, the Roy family appears to have it all. But as each series unfolds, we get the impression that there’s something that would’ve been far more valuable to the Roy children than money: time with their dad. Not only could a better relationship with their father have made them more well-rounded and independent individuals, but it could also actually have been good for business too.

It is important to note that estate planning needs to be considered on an individual basis in the context of your unique circumstances, taking into consideration where you are in the world, and where you plan to be in the future.

To book a consultation to discuss your estate and succession planning with our advisory team, contact us today or call us on +44 (0)131 625 6000.