All About Estates

“Unmasking” the Issues Facing Family Businesses

This post was contributed to by Maureen Berry and Demetre Vasilounis of Fasken.

If there is one thing that 2020 has taught us, it is that the world as we know it is capable of changing overnight. While the COVID-19 pandemic has had immeasurable impacts on our economy, our interactions with our loved ones, and our way of life, it has perhaps served an important role in that it has reminded us to remain ever grateful for the things we treasure and those we take for granted.  This pandemic has taught us, among other things, the importance of proactivity in preventing tragedy. In fact, one of the reasons that I enjoy practicing in estate planning is because my role is to offer proactive, not reactive, solutions for my clients. Although we the readers of this blog are all too familiar with the benefits of proper planning and the adverse consequences of failure to do so, the reality is that these topics are not top of mind for most people in the course of an average day.

I believe that family businesses are particularly susceptible to any shortcomings in succession planning. As we know, there are numerous factors involved in any effective family business succession planning: corporate structure, ownership interests, tax considerations, family dynamics and personal wishes among them. We know that family business succession planning requires a delicate balance of these factors, and that even the slightest disruption can upset that balance.

Estate freezes may have been carried out on the assumption that there would be future growth, leases may have been entered into assuming a footprint for a certain number of “on site” employees, expansion plans may have been embarked upon assuming, at the very least, the continuation of the business in its current form.  Shareholders agreements may have been signed that presumed a certain valuation methodology for buy-outs that may no longer be appropriate, mobility of employees, even within Canada, may be impeded, and I think that it is apparent that investment in technology must be, if it is not already, a priority.  The traditional way in which networking and negotiating is conducted seems a distant memory.  Family members who have governed themselves and made life decisions on the assumption that they would someday take the helm of the family business may now be faced with a very different reality.

This is why it is important for us to come together as Trusts and Estate Practitioners. We need to share strategies with one another to mitigate the impact of this pandemic and any related economic fallout in the future. We must take more care than ever to ensure that our clients have considered every possible contingency when establishing succession plans.  And we must continue to advocate for amendments to existing laws that are sensible given the current climate.

I encourage you to consider: how has your practice changed since this pandemic took hold? What are some of the lessons we can carry forward, once this is a distant memory? Now more than ever is the time to pause, reflect, and plan for our new reality.

About Maureen Berry
Maureen Berry is a partner in the Trusts, Wills, Estates and Charities group at Fasken. Maureen’s practice is focused on wills, estate planning, domestic and international trusts, private corporation taxation, and executive compensation. Maureen also advises charities and non-profit organizations. Working with Canadian and international families, firms, corporations and charitable organizations, she provides advice on all aspects of private client matters. She is a leading expert in the fields of tax law and estate planning. As an Adjunct Professor at Osgoode Hall Law School, she teaches Advanced Estate Planning. Maureen has previously taught corporate tax and international tax at the University of Toronto and Western University, along with the Bar Admission course for up-and-coming lawyers.

1 Comment

  1. Malcolm Burrows

    August 21, 2020 - 2:26 pm

    Maureen –

    I like your meditation on the moment and our collective responsibility as estate professionals. Thank you. Malcolm

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