Let’s not talk about Coronavirus.  In any crisis planning, the risk is that people focus so much on what the nature of the emergency could be (death of a principal, financial disaster, kidnap) that they plan for those specific events, rather than considering the effects of any given event.  This kind of focus can mean people don’t plan for other kinds of risk.  You’re looking left when something falls from above.

So let’s do no more than use Coronavirus as an example of an unexpected happening that can throw any family, or family business, into crisis.  Let’s imagine a family with a well-established business, and family trusts, and family members in different locations; they have many advisers and plenty of sophisticated planning in place.  Someone (family, trustee or employee) finds themselves quarantined.  Now let’s think about what that does to the day-to-day needs of the business, the trusts and the wider family.

Any business which has China in its supply chain will have already had detailed conversations about that; other supply lines may also need to be thought about over coming weeks.  But who’s running the business, and who will make those decisions?  In today’s world, meetings can be held, and a good deal of work carried on, using all the amazing technology available.  But some physical presence, and wet-ink signatures, may still be needed.  And if someone is ill, or otherwise unavailable, they may not even be able to take part in video meetings or calls.  If several people are affected, that amplifies the problem.  Is the board quorate?  Does the company’s constitution or bank mandate require certain numbers of people, or particular individuals, to participate?

And what about the trusts?  Some families rely on trusts as their regular sources of funding.  If the trustees are affected, so may the cash flow be.  The inability or refusal of a Protector to agree to something can immobilise a trust entirely.

Then there’s the family.  What if there are family members abroad who cannot go home – how do they fund themselves, and what’s their visa status?  What if the person who controls the bank account is out of action?

Some years ago, I helped a family through a crisis which saw us look with fresh eyes at the perfectly sensible arrangements that advisers usually put in place.  These tend to focus on what happens if one person dies or is unavailable, but in this case, multiple individuals were affected, and no-one was able to take their place in the ‘waterfall’ of intended successors.  That left crucial boards inquorate, and trusts unable to function as intended.  Funding arrangements had to be put in place urgently, and many displaced family members’ needs had to be addressed quickly.  It changed the way I think about risk, and in part led to my setting up Propitious to help others plan ahead.

Putting plans in place, which would work in any unexpected scenario, need not be complex, but it can help to prevent those events from becoming a bigger emergency.

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Arabella Murphy

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