Steve Bing’s sad legacy was that he ultimately failed to provide for his children in the way he wanted. I was really struck by this story, and wrote a piece for Wealth Briefing about it (the link to my original article is here: https://www.wealthbriefing.com/html/article.php?id=192184#.YUCB_p1Khdh).
If anything, this story should tell us all many things about the pitfalls of succession planning. Steve Bing was a man who appeared to have it all – a very wealthy family, and success of his own in the film industry. He reportedly did not have a relationship with his two children born to former girlfriends (including Liz Hurley’s son Damian). Over the last few years, he seemed to want to change that, and won a legal battle to ensure that they would benefit from his family’s trust alongside his sister’s legitimate children.
And then he died unexpectedly.
It has been reported recently that his father has since won an appeal to overturn the decision, meaning that Steve’s illegitimate children are once again excluded from the family trust.
This, in a nutshell, is the problem with death (and sometimes taxes) – things don’t always happen in the order that people assume they will.
I’ve seen many examples of the difficulties caused when the “natural order” of death is disrupted, often the young scion of a family business dying suddenly. In one case, he hadn’t made a will at all, leaving the business majority owned (under intestacy rules) by his pre-school age children. In another instance, the business was on the eve of an amazing takeover, which fell away as there was no means of voting his shares.
This can affect many different kinds of family, as happened when a middle-aged child predeceased their extremely old mother, causing havoc with the careful inheritance tax planning the mother had already undertaken.
It is natural to assume that people retire or die according to their age, but a will or succession plan or risk plan which focuses entirely on what happens when the parent, or chairman, or other senior person, leaves the stage has missed a vital point.
I’ve learnt this the hard way. Years ago, as a solicitor, I remember drafting a complex ‘waterfall’ of succession arrangements – if the chairman left office, first x, then y, then z would take his place. Some years later, to my horror, unforeseeable events meant that all of those people were unavailable when a disaster occurred. Fixing the problem was a lot harder than pre-empting it by thinking about the unthinkable.
Take the successful couple I spoke to recently, who had meticulously planned their wills on the assumption that their (adult) children would one day have children themselves. Their draftsman took this so literally that, if a child predeceased the parents, and had no offspring, there was no alternative route for the legacy – that share would go to charity. The parents were surprised by this, and naturally would prefer it to pass to their other children or grandchildren. Luckily, it wasn’t too late for them to avoid the problem.
The key to any plan – whether for succession, or anything else – is to take a moment to step back and think, “What if it does not all go the way I have planned?” A good plan is not one which sets out the steps that will be taken when certain events occur; it’s one that also creates options for what should happen if those events don’t occur, or something else entirely unexpected intervenes.