SUCCESSION PLANNING: WHEN “WE KNOW WHAT TO DO” IS NOT THE PROBLEM

If you have been meaning to “get your succession plan sorted” but it keeps slipping down the priority list, you are not alone.

In our day-to-day work we see a consistent pattern: business owners and families generally understand what succession planning is, but the plan never gets properly executed. Documents remain unsigned, share registers are outdated, key agreements are missing, and crucial conversations are postponed until a crisis forces everyone’s hand.

The irony is that succession planning is almost always easier (and far less expensive) to do calmly, while you still have full control of the process.

Below is a practical, South Africa - specific overview of what we mean by succession planning, what can go wrong if it is neglected, and the options you should consider -both for your business and for your personal affairs.

What “succession planning” really means (in business and at home)

Succession planning is not only about what happens when someone passes away.

A well-designed succession plan prepares for the realities that derail families and businesses every day, including:

• Sudden incapacity (illness, accident, cognitive decline)

• Retirement or exit

• Death

• Relationship breakdown

• Disputes between family members / shareholders

• A key person leaving unexpectedly

In simple terms: succession planning is about making sure that when the unexpected happens, the right people can step in, decisions can still be made, and assets and responsibilities transfer in an orderly way - without chaos.

Why people don not execute (even when they understand the need)

When we unpack why succession planning does not get implemented, the reasons are usually very human:

• “I am too busy right now – I will do it next quarter.”

• “My family will sort it out.”

• “My business partner knows what I want.”

• “It feels uncomfortable to talk about death or disability.”

• “We drafted something years ago, so we are probably covered.”

• “I do not even know where to start (and I do not want admin headaches).”

  
  

The problem is that good intentions do not carry legal authority. Signed documents, updated records, and clear structures do.

The real-world consequences of not having a plan

1) Personal consequences for you and your family

When a person’s affairs are not properly structured, families often face:

• Delays and admin burdens at the worst possible time

  Estate administration takes time and requires formal steps. Where documents are missing or unclear, delays multiply.

• Family conflict and uncertainty

  When roles, inheritances, and responsibilities are not clearly set out, misunderstandings and disputes become much more likely.

• Liquidity pressure

  An estate can be “asset rich and cash poor.” If there is not enough liquidity to cover debts, expenses, and tax obligations, loved ones may be forced to sell assets quickly - or at a discount.

• Incapacity problem

  This is a big one in South Africa. If someone loses mental capacity, it can be surprisingly difficult for family members to obtain the legal authority needed to manage finances or sign documents.

• Misalignment between your Will and other arrangements

  Retirement fund benefits and life policies can have their own rules and beneficiary structures. If these do not line up with your broader plan, your intended outcome may not happen.

2) Business consequences that can be immediate and expensive

In business, lack of succession planning can trigger serious disruption:

• A leadership vacuum

  If a key director, shareholder, member, or partner dies or becomes incapacitated, decision-making can stall overnight.

• Operational paralysis

  Think about bank mandates, signing powers, customer contracts, lease agreements, payroll, VAT submissions, and supplier arrangements. If authority is unclear or concentrated in one person, the business can struggle to function.

• Shareholder/partner disputes

  Without a shareholder agreement or partnership/association agreement that deals with exit events, surviving stakeholders may find themselves in business with heirs who have different priorities, no operational involvement, or conflicting expectations.

• Forced sales or undervalued exits

  Where there are no agreed valuation method and no funding mechanism, exits become rushed and contentious -often destroying value.

• Risk to staff, customers, and reputation

  Uncertainty at the top affects confidence throughout the organisation. Key employees may leave, customers may hesitate, and competitors may take advantage of instability.

Practical options to consider in a South African succession plan

There is no one-size-fits-all solution. The right structure depends on your family circumstances, the nature of your business, and what you are trying to achieve. But the building blocks usually include the following:

a) Personal succession planning essentials

Most people benefit from considering:

A properly drafted, valid and up-to-date Will

This is foundational. A Will should reflect your current family situation, your asset structure, and your wishes and it should be executed correctly.

Estate administration planning

Make it easier for your executor (and your family) by ensuring:

• key documents are accessible,

• asset and liability information is updated, and practical “where to find what” information exists.

Liquidity and funding planning

This may involve insurance, cash reserves, and careful planning around debt and obligations.

• Trust structures (where appropriate)

  Trusts can be useful in certain circumstances (for example, where minor children are involved, or where asset protection and continuity are priorities). They are not a universal solution—and they should be implemented thoughtfully.

• Alignment of beneficiary nominations and estate planning

  Retirement funds, life policies, and certain investment products may pass according to beneficiary designations or fund rules. The goal is to ensure these arrangements support - rather than undermine - your broader plan.

• Incapacity planning

  Because of how South African law treats capacity and authority, planning for incapacity is essential. The plan should identify how decisions will be made and who will do what, if you cannot act for yourself.

b) Business succession planning essentials

For businesses, the following are common (and often missing) components:

• Shareholder / member / partnership agreements that deal with “exit events”These should address what happens on:

  • death,

  • disability,

  • retirement,

  • dismissal,

  • or a voluntary exit.

• Buy-and-sell arrangements and funding mechanisms

  A good agreement is one thing; having a realistic way to fund the buy-out is another. Funding is often done through insurance or structured financing, depending on the business and the stakeholders.

• Clear governance, signing authority, and bank mandates

  If one person holds all authority, the business is vulnerable. A plan should ensure continuity of decision-making and operational authority.

• A workable leadership transition plan

  This can include appointing and mentoring successors, documenting critical processes, and setting realistic timelines and milestones.

• Housekeeping and record updates

  Succession planning often fails because records are outdated: company registers, CIPC details, director appointments, resolutions, employment contracts, and key commercial agreements. Implementation matters.

A simple “succession planning” checklist to get started

If you want a quick sense-check, ask yourself:

• If I am not here tomorrow (or I cannot make decisions), who can sign and act - for my household and my business?

• Are the right documents signed and stored safely?

• Do my Will, business agreements, insurance and beneficiary nominations work together?

• Would the people I leave behind know where to find information and what steps to take?

• If my business partner and I disagree (or one of us exits), is there a clear, funded, enforceable process?

If any of those questions make you uneasy, it is a good sign that your plan needs attention.

We can take the execution off your plate.

Many people do not struggle with the concept of succession planning - they struggle with the implementation.

If you would like help, our firm can manage the process end-to-end, including:

• reviewing your current position and identifying the gaps,

• recommending appropriate structures for your circumstances,

• drafting and updating the necessary legal documents,

• coordinating with your accountant / financial adviser / insurer where needed,

• and ensuring the plan is properly implemented, signed, stored and kept current.

If you are ready to put the right safeguards in place (and keep them in place), you are welcome to contact us to set up a confidential discussion.

This note is provided for general information purposes and is not legal advice. Proper advice should be obtained with reference to your specific circumstances.

Key South African legal touchpoints used (optional internal reference – remove before publishing)

• Dying without a valid Will triggers intestate succession, with distribution determined by the Intestate Succession Act 81 of 1987. (Government of South Africa)

• Reporting a deceased estate and the role of the Master of the High Court, including the R250,000 threshold: estates above this generally require Letters of Executorship, while smaller estates may be dealt with using Letters of Authority in terms of section 18(3) of the Administration of Estates Act 66 of 1965 (as described by the Department of Justice and Constitutional Development, and SARS guidance). (Justice)

• Enduring (continuing) powers of attorney are not currently part of South African law, and loss of mental capacity creates real authority challenges—hence the importance of incapacity planning. (Justice)

• Retirement fund death benefits are dealt with under section 37C of the Pension Funds Act, and trustees have duties to identify and allocate to dependants/nominees; nominations guide but do not automatically control outcomes, and these benefits are generally treated separately from the deceased estate. (Law Library)

Formalities for a valid Will in South Africa are set out in the Wills Act 7 of 1953 (including signing and witness requirements), so execution quality matters—not just the wording. (Justice)