Succession planning implies more than simply making a will. It is a process that makes it possible to work out solutions to the key objectives of protecting your family while you are alive, and facilitating the transfer and the safeguarding of the assets which will eventually be transferred upon your death.

A good succession plan is personalized according to your own financial needs as well as to your lifestyle. It must make it possible to identify the suitable solutions for you and your heirs by taking into account the reduction of the taxes, as well as providing answers to the following questions:

	How will capital gain tax affect me ?
	Do I have enough life insurance ?
	How can I transfer my business ?
	How can I contribute to a favourite charity ?

There are several tools to manage the inter-generational transfer. For example:

	Holding companies
	Family trusts
	Estate freeze
	Business continuation planning

Succession planning is a continual process. It must be reviewed on a regular basis in order to be up to date with tax changes and changes in the client’s personal situation.

The succession planning process makes it possible to raise personal concerns of people wanting to transfer their inheritance. The questions most often put forward include:

	How can I equalize the inheritance between my children ?
	How do I transfer an inheritance to children with special needs or personal problems ?
	How do I write my will and to be equitable to my children of two different marriages, while taking care of my new wife ?

The planning process will make it possible to deal with each problem and to find the appropriate solution.

The concerns surrounding the transfer of an active company vary according to the evolution of the company.

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Survival phase

At the survival stage, the concerns and objectives of the owner are very short-term: s/he is concerned with immediate repercussions. At this stage, given that the value of the sale of the company would be insufficient to provide financial security for the family, planning will be directed more towards estate creation.

The purchase of life and disability insurance will be the foundation of any planning. The owner of the company will often be in debt and will have to purchase credit insurance to release his/her personal endorsement with the bank and other creditors.

Growth Phase

At the growth phase, the company enjoys a certain financial stability and begins to be profitable. The strategies of the company are directed more towards the development of new products and services in order to support the growth of profits. A part of the debt is discharged, or about to be. At this stage, it is important to seek qualified personnel and to retain them.  

Taxes become a concern. The losses incurred in the past having been reclaimed, the benefits are now taxable. However, the tax rate of the company is still relatively low. The projects are still in the short- and medium-term, but the owner of company must face new concerns. In addition to the problems which were not completely resolved during the first phase, the owner must still ensure the continuity of the company in the event of his/her death or disability, or that of a key associate. The company still requires protection.

Short and medium term planning:

	Key person insurance
	Buy-Sell agreement between shareholders, with life and disability insurance
	Employee benefit plans

Maturity phase

At this stage, the question of the company’s survival is not a major concern: the emphasis is now on its prosperity. Normally the company carries considerable surpluses. The debts, if there are any, are long-term and they are sufficiently funded not to be a source of major concern. However, the taxes are much higher because of its extremely high revenue and the company Is no longer eligible for the small business deduction.

Due to the increased stability of the established company, the owner can make long-term decisions. S/he can establish a broad outline of the placement of where the company will be in the future. The company can draw up plans for the current year based on a long-term strategy.  

The role of the next generation can be taken into account. In order for a company to reach the maturity phase, it must be managed in an effective manner. The intermediate and higher executives have a more crucial role than in the earlier phases where the owner is implicated in all the decisions.  

The company must be protected from the loss of a key person due to death or disability. The loss will have more impact at this stage of the development of the company since it does not have executives to manage the company.

Medium and long term planning:

	Remuneration and retention of key executives
	Remuneration and tax strategies for the owner of the company
	Income tax on capital gains

Transfer Phase

In the transfer phase, we discuss the now well-established company. Management does not rest solely on the shoulders of the founder but on tested senior executives who ensure its daily management.

Generally, the owner’s children began their training at lower levels with the possibility of taking charge of the company.

Many questions are raised by the owner at this stage of his/her life:

	Will my children be able to grow the company ?
	Will the company be the source of enrichment for my heirs or a source of discord ?
	How will I distribute my assets, between my children, in the most tax-efficient manner ?