Wealth Allocation With Wisdom and Prudence
Wisdom and prudence is required in allocating your wealth in a manner that will support the compounding of that wealth across future generations and underpin family unity.
No matter how far away you believe the possible transition of your business may be, succession planning commences the day your business is started.
One of the foundations of succession planning is the creation of wealth allocation principles. These principles are far broader than just saying ‘everyone will share equally’ and will need to be reviewed and updated progressively as the complexity of your wealth holding grows.
The starting point to developing your allocation principles is to build, and then maintain your wealth map.
A wealth map is a corporate structure diagram (often a series of diagrams) that reflects the various entities and people that exist in your business and the family structures tracing the ultimate owner.
Your wealth map has several layers of information including:
1. The logical grouping of businesses by category that allows you to see what flexibility has been designed into your overall structure.
2. The details of shareholders, unit holders, and beneficiaries tracing through to the ultimate owners, both actual and contingent.
3. The profit and market value of the various entities reflecting where wealth lies and also inter-entity debts, family loans, external debt, and guarantees that can effectively shift wealth.
The wealth map allows you to monitor the logical growth of your wealth, its ownership, and the flexibility that is being built into the wealth structuring.
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An Invaluable Resource — ‘Transition — Orienteering The Lands of Succession’
