Cathy and Tim had owned their family business for many years. It was a thriving importing company, supplying a niche product to the dairy industry. Two of their three children worked in the business, while their youngest daughter was a stay-at-home mum. She had trained as a primary school teacher and was planning to return to work once her youngest started kindy. Many years earlier, Cathy and Tim had set up a trust that now owned the shares in the business, as well as several commercial properties they had acquired along the way. Three of those buildings were used by the company. They also had a separate trust that owned their family home and their holiday home in Taupō.

Cathy had not worked in the business for some time, and Tim was slowly stepping back from the day-to-day demands of running it. Their middle son, James, managed the relationships with key suppliers, while their eldest daughter, Jen, led the sales team. Both James and Jen were keen to step into Tim’s role as managing director. This was giving Cathy and Tim a few sleepless nights, as they genuinely felt both children had the ability to do the job well. Their youngest daughter, Kate, had also started to raise concerns at family dinners that she had not been given the same opportunities to be involved in the family business. She had even suggested that her husband might take up a role in the company.
Cathy and Tim were also unsure about who should own the company shares in the future. The business was profitable and had built up strong cash reserves, with significant dividends paid each year. On one hand, it seemed sensible for James and Jen to own shares one day, given their active involvement in the business. On the other hand, Cathy and Tim wanted to be fair to Kate, who was not working in the business but could still benefit from the income it produced. Then there was the added question of the commercial buildings used by the company. James and Jen had made it clear that, if they were running the business, they would not want Kate to become their landlord.
They also needed to think carefully about timing. Should they pass assets on to their children while they were both still alive, or would it be better to wait until one or both of them had passed away?
Cathy and Tim were mindful, too, of the role their children’s partners might play. They were concerned that any tension between the children could become more difficult if partners became involved in family discussions. They also wanted to protect anything passed on to their children, so that it remained their children’s own property rather than becoming relationship property if one of the children separated from their partner.
After talking things through, Cathy and Tim recognised that they needed some guidance. They had ticked the main legal boxes: trusts, wills, a memorandum of wishes and enduring powers of attorney were all in place. But none of these documents had been reviewed for many years. Their lawyer was their independent trustee, although they did not meet regularly, and they knew he was getting close to retirement. It felt like the right time to seek specialist advice.
Cathy and Tim spoke with their accountant about the issues they were facing. She recommended that they meet with a lawyer who specialised in succession planning and intergenerational wealth transfer. Together with their accountant, they met with the lawyer, and both advisers emphasised the value of having a trusted team of professionals working together. A programme was put in place to help Cathy and Tim develop a clear plan for how and when assets might be passed on to their children. This would likely involve careful conversations with the children and more transparency than there had been in the past. It would also mean taking a fresh look at the structures Cathy and Tim already had in place, so their plans could support both the family and the business for the years ahead.
Every family is different, and succession planning can involve difficult and complex decisions. Taking the time to review existing arrangements and seek the right advice can help families work through these issues and make decisions with greater clarity and confidence. A discussion with experienced advisers can often help identify opportunities and issues that may not have previously been considered.

Tammy McLeod, Managing Director, Davenports Law