Marcel Strating and Riemke Schut are financial planners at ING Private Banking. They speak with entrepreneurs daily about business continuity. “In our experience, it gives DGAs peace of mind when the future of the company is secured,” says Riemke.
“Often, the entrepreneur and their family have very different ideas about the future of the business, particularly regarding succession,” Marcel adds. “By discussing this thoroughly and recording it in a family charter, everything becomes clear to all parties.”
A family charter outlines the family’s and the business’s mission, vision, values, and goals. It can also include key principles of good governance.
A trust office foundation allows you to define who will take over management of the company if the DGA is no longer able to do so. In such a foundation—also known as a STAK—control and economic ownership are separated. As an entrepreneur, you can structure the future management according to your wishes. This could be one of your children, but also an accountant or members of the management team.
Riemke and Marcel outline three situations in which it is essential to make arrangements.
"}},{"componentType":"paragraph","title":"1. Death","richBody":{"value":"What will your loved ones face if you pass away? In addition to the emotional impact, questions arise such as: who inherits which personal assets, and what happens to the business?
You can record your wishes in a will. This document specifies who receives which part of the estate. It is important to appoint an executor to carry out the will.
In addition to your personal affairs, the will can also address the settlement of your business assets. For example, you can ensure that the intended successor receives the company shares. You can arrange for each heir to receive their share of the estate while also securing the continuity of the business. The will also allows you to express your wishes regarding the future of the company—helping to minimize potential conflicts among heirs that could disrupt business operations.
Business succession is a specific situation where it is wise to discuss everyone’s wishes—including potential successors, siblings, and others involved.
Although the law provides a basic framework for inheritance, it is often too limited for most entrepreneurs. For example, there are no legal provisions for cohabiting partners. A will is therefore essential if you want to leave something to your partner. You can also structure the will to achieve maximum tax efficiency.
"}},{"componentType":"paragraph","title":"2. Incapacity","richBody":{"value":"There may be situations in which you become mentally incapacitated—for example, due to dementia or a coma. Who will have access to bank accounts, manage the investment portfolio, or take care of the pets? These matters can be arranged through a living will with a notary.
On the business side, it is also important to appoint someone to manage the company. Be sure to register this authorized person with the Chamber of Commerce. You decide who to appoint. This could be your life partner for certain matters, but they may not be the most suitable person to run the business. You can appoint different individuals for medical, personal, or business decisions.
"}},{"componentType":"paragraph","title":"3. Divorce","richBody":{"value":"Divorce can also impact the continuity of your business. Without proper agreements, your ex-partner may retain rights and influence within the company. To prevent this, you can establish prenuptial agreements. However, ensure these do not conflict with other existing agreements made on behalf of the business—such as arrangements with other shareholders or regarding succession.
"}},{"componentType":"sectionTitle","title":"Good agreements pay off"},{"componentType":"paragraph","richBody":{"value":"The question “What will happen to my business if something serious happens to me?” deserves a clear answer. “Don’t assume things are automatically taken care of,” Marcel and Riemke emphasize. And don’t assume successors will know what you would have wanted. That only creates unnecessary doubt and uncertainty for those around you. Riemke: “Our advice is to choose a trusted confidant and inform them of your wishes. That way, someone is always aware, and the continuity of your business is not at risk. And finally: make sure your wishes are properly documented.”
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