Business succession: Would your plan survive a crisis?

For many Queensland family business owners, succession planning is something they know they should address, just not today. The business is operating well, family relationships are stable, and there is confidence that when the time comes, matters will "work themselves out".

The difficulty is that succession events rarely occur on schedule.

Incapacity, sudden illness, death, or relationship breakdown can expose structural weaknesses in trusts, companies and estate planning documents. Where there is no clear and legally effective succession framework in place, control of key entities may pass in unintended ways, resulting in dispute, operational disruption and significant financial consequences.

Informal understandings between family members are not legally binding. In the absence of properly structured documentation:

• If you lose capacity without an effective enduring power of attorney in place, decisions about your personal and financial affairs may be determined under Queensland's statutory regime, including potential appointment of an administrator by QCAT.
• If you die without a valid will, your personal assets will be distributed in accordance with the rules of intestacy, which may not reflect your intentions.
• Assets held on trust will be governed strictly by the terms of the trust deed, which may not provide for any automatic appointment of an alternative controller.
• Company interests will be dealt with under the company's constitution and any shareholders agreement, which may not align with your intended succession pathway.

A well-structured succession plan is not simply about distributing assets. It is about preserving control, protecting relationships, and ensuring business continuity across generations.

Business Succession Toolkit:

The following documents form the foundation of an effective business succession toolkit:

A. Will

A Will outlines the manner in which your personally held assets are to be deal with following your death, and may also appoint alternative controllers for trust structures in which you have an interest. However, the provisions of your Will are subject to the risk of any claim brought against your estate, which may result in the court ordering an amendment of your original intentions following your death.

B. EPOA

An Enduring Power of Attorney confirms what people are able to make decisions on your behalf during your lifetime, whether after you have lost capacity or before. This document may also be used to confer control of entities and structures (ie trusts) to your attorneys, but this is always subject to the terms of all relevant governing documents.

C. POA (company)

This document acts as a corporate equivalent to an EPOA, and can be used to appoint an alternate decision maker in the event of the incapacity or death of a key person within the business (subject to the rights of shareholders to appoint a new director).

D. Deed of appointment of alternative controller

This document can appoint a person to take control of your structures (ie trusts) automatically following your death. This document limits the risk that a court will overturn such appointment as part of any claim against your estate. The controller role is often referred to in trust deeds as the "appointor" or "principal". This is the person who can effectively control the trust, and by extension the trust property, by appointing a new trustee at their discretion.

E. Business succession agreement

This document is a bespoke agreement which we are able to draft to deal with all elements of your business succession planning supplementary to the wishes outlined in your will. Often this involves transfers of assets during your lifetime in exchange for certain contractual rights given to you and enforceable against the parties who benefit from your succession plan to ensure that you are adequately provided for during your lifetime after control and/or ownership has been passed.

F. Shareholders agreements / partnership agreements

These documents can control and limit the manner in which interests are dealt with and can account for the consequences flowing from the death of a key figures in a business.

G. Establishment of new entities / structures

While this may not always be appropriate given there are often transfer duty implications for transfers of assets during your lifetime, this may be a helpful tool in certain circumstances.

A well-structured succession plan integrates estate planning, structuring and collaboration with tax advisors. Queensland business owners should review succession arrangements regularly to ensure that they are up to date and consistent.

If you are considering setting up a succession plan for your business, or wondering if your current plan is adequate, there is no better time than now to make sure that your plan is watertight, and would actually work if tested tomorrow.

Next Steps:

Seeking advice early can protect both the business you've built and the relationships that matter most. If you would like to discuss succession planning for your business, please reach out to our Wills, Estates, Planning + Structuring Team or Business + Corporate Advisory Team to discuss your matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.