Our Associate Director, Michelle Bromfield recently sat down with Brett Gilday from Fitzpatricks Advice Partners. Brett shared valuable, real‑world insights on the critical importance of thorough estate and business succession planning. These insights come from his 25 years of experience helping successful families and business owners achieve financial organisation and security.
Brett highlighted how well-prepared documentation can prevent financial and operational turmoil following unexpected events affecting business owners and reflected on how many businesses, even large ones, lack critical exit documentation such as buy-sell agreements, shareholder agreements, corporate powers of attorney, and appropriate insurance.
Importance of Estate Planning in Family Businesses – Corporate Powers of Attorney
Brett recalled an example of a family-owned electrical business where the father was the sole director and the mother acted as general manager without directorship status. Despite their well-established business, their estate plan was outdated. The family had three children intended to inherit the business. Brett and his team recommended obtaining a comprehensive estate plan, including a testamentary trust and emphasizing a corporate power of attorney. This proved invaluable when the father tragically died in an accident. Because the corporate power of attorney was in place, the mother was able to assume control of the business within 24 to 48 hours, avoiding financial chaos such as locked bank accounts and unpaid wages during a difficult emotional time.
Lessons from a Business Partnership Loss
Another case involved a business where a 51% owner and front-facing partner passed away. Although the business had a buy-sell agreement, shareholders agreement, and business will, a significant flaw existed in the valuation method specified—a range valuation with nearly $2,000,000 difference between the lowest and highest values. This ambiguity caused disputes between the deceased’s family, who sought the higher valuation, and the business partners, who preferred the lower figure. Consequently, the insurance coverage was deemed insufficient due to the unclear valuation method, illustrating the importance of precise documentation in such agreements.
Summary
Brett noted he was continually “surprised at how many successful families we encounter who have spent a lifetime accumulating very significant wealth and businesses, but how very few cast a thought to what might happen in the event something were to happen to them.”
“It can be a case of not wanting to confront their mortality, or commonly, complex family situations mean that the Estate discussion gets put in the too hard basket”. Brett agreed with advice he was provided by a mentor estate lawyer many years ago who noted that “having something/anything in place, even if it is only 70% to their liking was still better than the chaos left behind by having nothing documented at all.”
The key takeaway is that major problems often arise unexpectedly, and proper planning and documentation are essential safeguards to ensure business continuity and financial stability during difficult times. At Conditsis Lawyers, we provide full‑service, holistic estate planning, not just Wills. We offer Corporate Powers of Attorney, which is a key consideration and important to protect your business. Contact us today to learn more about the services we offer – (02) 4324 5688.
