Robert Burns coined the saying that the best-laid plans can go wrong. With experience of helping clients around the world to navigate estate planning, inheritance decisions and disputes, Withers’ lawyers can attest that when there is significant wealth at stake, even the most carefully drafted words become the subject of intense scrutiny.
This can leave relatives not only grieving a loved one but simultaneously in a dispute, struggling to come to terms with the deceased person’s legacy. To avoid such a scenario, it is worth considering where things most commonly go wrong.
Avoiding difficult conversations
A lack of communication is perhaps the most common theme in succession disputes.
‘Succession planning goes far beyond drafting a will,’ says Chenthil Kumarasingam, regional dispute resolution leader for Asia. ‘It involves understanding family values, expectations, and how roles will be allocated. We used to put no-contest clauses into wills, but the real solution is building consensus beforehand.’ These early conversations are often the foundation of effective succession planning, particularly where significant wealth or complex family dynamics are involved.
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Tensions arise quickly where decisions come as a surprise, so the Withers team advises early, structured conversations. Although they might be uncomfortable, they help manage expectations and prevent misunderstandings from escalating.
Relying too heavily on one individual
Many successful families operate around a central decision-maker, which creates risk if that individual becomes unable to act.
‘One person holds the information, makes the decisions and others defer to them,’ says Stephen Richards, regional division leader for trust, estates and inheritance disputes in Europe. ‘When that person is no longer there, things can quickly unravel.’
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This can leave others unprepared and, in some cases, in dispute. A strong patriarch or matriarch will share knowledge and responsibility to ensure continuity.
Weak governance in family businesses
Clear long-term family business succession planning is vital, especially where succession is expected to span across generations. ‘Family-run companies tend to be quite light on corporate governance,’ says Kumarasingam. ‘If the parent who built the company up anoints one child as leader but splits ownership without discussion, that can become a problem.’
Such disputes may impact the business quickly, so it is wise to put more robust governance in place, whether through external management or earlier communication, and to consider alternative provisions for those not receiving shares.
[See also: The best generational wealth and family business advisers]
Choosing the wrong trustees or executors
The selection of trustees and executors is one of the most consequential, and often underestimated, decisions in succession planning.
‘Clients will often say they trust their children and want them to act together,’ says Michael Brophy, who leads Withers’ US private client and tax team from Los Angeles. ‘But they don’t always consider how decisions will be made in practice, or what happens if there is disagreement.’
Taking AI’s word for it
A more recent development is clients using AI to navigate legal issues. But while this can help people understand the landscape, it is also unreliable.
‘AI can give people a misplaced sense of confidence,’ says Richards. ‘That’s something we see when opponents are litigants in person who think they have been given clever arguments but are in fact pushing the case deeper into the quagmire.’
[See also: Is the AI boom bursting wealth management’s bubble?]
Nor should the human element of legal advice be underestimated. ‘We don’t just solve the legal problem; we try to make the situation better. Perhaps some ties can be restored, or issues can be disentangled so that the family can work together,’ Richards adds.
Rushing into legal action, or leaving it too late
Legal action should be a last resort, not a knee-jerk reaction. ‘I’ve seen cases where parties have launched litigation based on limited information,’ says Brophy. ‘By that point, they may already have spent significant sums, and positions have hardened.’
That said, it’s also important not to delay too long as, in many jurisdictions, strict time limits apply to challenges involving wills and trusts, adds Brophy: ‘Whether through grief, inaction or poor advice, some clients simply wait too long. By the time they are ready to act, they may have lost the ability to do so.’
Failing to plan for loss of capacity
‘One of the biggest problems we see is issues around the elderly and their wealth,’ says Brophy. ‘As people get older, their abilities may change and that can leave them vulnerable to influence.’
‘In jurisdictions such as California, capacity is not a binary concept; it exists on a spectrum,’ explains Brophy. ‘That sliding scale makes it possible for different parties to characterise someone’s behaviour in different ways. I do think the issues of capacity and influence are challenging for families. I’ve seen cases where both sides absolutely believe what they are saying about the elder is true, and it tears the family apart.’
[See also: The quiet reality many families face when parents age]
Communication is again key to heading off that risk. Family members need to stay in touch with elders to make sure there are no issues with them handling their affairs and to notice whether any undue influence is occurring. It can also be helpful to obtain medical evidence of capacity or introduce independent oversight before changing plans.
The answer for testators may be to share their plans early so that they can have a discussion with their family and resolve disputes while they are still around to defend their own plan.
Assuming everything is fine
On the flipside, Richards sees plenty of cases where an elderly person has been influenced to change their succession plans. ‘Isolation can really feed vulnerability,’ he says. ‘So often someone will come to me with concerns about a relative’s plans, but they’re not involved in their lives so they don’t know who might be influencing or controlling them, and that is a real problem.’
In the end, many of the most serious issues arise not because families failed to plan, but because they planned in isolation. Where those early conversations do happen, families are far better placed to navigate not just the transfer of wealth, but the relationships that sit behind it.
How well could you manage succession for a wealthy business-owning family? Find out by playing the Withers Succession game.
