Use Mediation for better Wills, Estate and Succession Planning
Succession planning for the family business and estate planning for family continuity are closely related – both in the interests they address and the problems they have to overcome. Modern businesses, like modern families, are increasingly complex, making effective planning a daunting and mind-boggling challenge, even for the most incisive individuals.
This article explains how mediation, a process of assisted negotiation using an independent expert, can be used to develop practical, comprehensive plans for family business succession and estate planning – reducing pain, uncertainty and costs for individuals, families and businesses and reducing the risk of disputes arising in the future.
The Planning Conundrum
Let’s face it – planning for the future is a chore. It’s hard enough finding the time and energy to keep up with the day to day running of a business and a family. So, succession plans for business and family, who needs ‘em? Answer: You, if you don’t want to leave a mess behind you in your family and in your business.
Ordinary businesses are viewed dispassionately. Their plans are formulated in terms of turnover, costs, markets, production capacities, staffing levels, product and service lines and the like. Succession planning for family businesses and estate planning for families are sensitised and complicated by emotion. Often, the desire to avoid family conflict defers planning until it’s too late – releasing the Dogs of War to attack the business and the family when they are at their most vulnerable.
It is simply impossible for any one person, be they a proprietor, patriarch or professional adviser, to possess the practical and technical knowledge required to deal with all the issues involved in making effective business succession and estate plans. Business, legal, financial and taxation issues must be considered in conjunction with family issues – all impact the health, wealth and survival of the business and the family unit.
Accountants, lawyers, financial, tax and business advisers, business managers and family members all have a stake in the planning process. How do you obtain and integrate their collective knowledge, experience, interests, views and energies so they work with you to design a plan that satisfies everybody’s interests and needs as well as possible?
A Place for Mediation
This is the quintessential task of the skilled mediator. Mediators are process experts who work with parties, in private, to help them recognise and deal with issues and problems, generate creative options and develop constructive solutions. Their objective is to produce durable, workable agreements that preserve and even improve underlying relationships.
Mediators facilitate the flow of information, communication and understanding and provide a forum where needs and interests can be recognised. They help remove the barriers to trust required to develop plans, obtain commitments and produce agreements.
Mediators are independent and have no stake in plan or dispute outcomes. They do not evaluate or judge and the agreements they help produce are not measured objectively against external criteria. Agreements are good if they are legal, workable and the parties believe they suit their needs.
Stage 1 – Exploration
After meeting with each individual to gain knowledge and understanding and to establish rapport, the mediator guides the group into exploration mode, where ideas and interests are developed through various communication brainstorming processes. These sessions may be joint or separate, formal or informal, open or closed – depending on everyone’s needs and circumstances.
Careful process and people management allows sensitive family, business and other issues to be drawn out and resolved with minimal conflict and embarrassment. Explosive and potentially disastrous emotional energies are recognised and handled constructively, rather than suppressed and left to fester – to cause damage later.
Stage 2 – Design
After welding the family members, advisers and other participants into a focused, collaborative organism, the mediator steers them through creative option generation. The mediator helps the group to generate, consider and approve or reject their own options.
Stage 3 – Solutions
Finally, the mediator helps to craft the approved options together into a coherent plan that shoes everyone how they will look, feel and satisfy their interests in real life. Since they are working with the group’s own approved options, consensus, commitment and agreement are usually found quite painlessly.
Mediation was introduced to Australia as an alternative to conventional litigation. It quickly proved its worth and now, in skilled hands, has evolved into more pro-active approaches for use in many problem solving situations.
The skills used to resolve difficult conflicts are now being used to help design superior plans for businesses and families, and those same skills are being used to help business partners and families avoid getting into conflict in the first place. Think of mediation as the modern, thinking person’s preferred approach for developing workable family and business succession and estate plans.