In doing succession and estate planning, it is important to work through various scenarios and timing of life events and plan for each of them. Sometimes we make assumptions about certain events that don’t turn out to be true.
Succession planning tip:Count the living people as living!
One example is three brothers who came to see me for business advice. The brothers were aged, 39, 43 and 46 at the time. They explained the succession for their business using the assumption that the 46 year old brother would both retire and die first just because he was the oldest.
I often observe younger people making plans for older people when they die. This assumption is a bad idea.
The most famous story
This story confirms that you should, ‘count the living people as living’ – from France in the 1960’s:
A 47 year old lawyer named Raffray made a deal with a 90 year old widow with no heirs named Jeanne Calment. He wanted her apartment and instead of paying cash he agreed to pay her 2500 francs every month she was alive. The story became newsworthy when the lawyer died of cancer at age 77, and Mrs. Calment was still alive and well at 120 years of age! She lived to be 122 years and 164 days – the oldest documented person in the world at the time.
The moral of the story
When planning for the future with partners, shareholders and family members of any age, just because one of them may be ‘getting up there’, don’t assume they will actually ‘get there’ any time soon!