Is 'Succession' realistic about disastrous estate and succession planning?

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In the Emmy-award-winning HBO Max/Crave show Succession, created, written and directed by Jesse Armstrong, aging patriarch Logan Roy and his family plot and scheme against shareholders and each other as they maintain control over their international media conglomerate Waystar Royco. In this series, experts examine how much the show gets right in the area of succession planning, deal making and breaking, and personal relationships within family enterprises.

In the final episode of Succession’s third season, Logan makes a hasty decision to sell the conglomerate without informing his children, each of whom believes themselves to be part of Logan’s succession plan. When they get wind of their father’s betrayal, the siblings form an alliance, despite years of vicious competition, to access their power within a voting trust.

In this second instalment in the series, our experts take a look at some of Logan’s estate-planning strategies (or lack thereof) to point out how much makes sense in reel vs. real life.

Meghan O’Neil, Partner, Mills & Mills LLP in Toronto

We know that estate planning and succession planning can overlap. In the area of estate planning, how common is it – as with Logan Roy in the pilot and second episode, where the Roy siblings are negotiating with the family counsellors and lawyers whilst their father lies comatose due to a brain hemorrhage – for a patriarch to avoid planning his estate and leave the debris for his children to clean up?

“At Mills & Mills LLP, we regularly deal with the consequences that flow from a patriarch or matriarch not engaging in the necessary estate planning, or any estate planning for that matter. Whether the business has modest value or represents a sizeable family fortune, the absence of proper planning, of course, can be very problematic.

As far as lawyers and family counsellors negotiating directly with the patriarch’s children, whether this would happen in practice would depend on various factors (including, of course, whether those advisors were properly authorized to engage in those negotiations).

Similarly, to the way there is typically not a formal “reading of the will” by a lawyer to the family like the dramatic moments depicted in many movies and television shows, it’s likely this scene from Succession would not play out the same in reality.

I find my ultra-high-net-worth clients have family offices and tend to have more regular ongoing conversations regarding these matters with their advisors and their children. It is also usually my ultra-high-net-worth clients who request family meetings to go over their estate planning together with their children to ensure their children understand the succession plan and have an opportunity to ask questions about it with the clients’ advisors. Importantly, this also ensures there are no surprises upon the death of the client.

However, advisors must take instructions from their clients, not a client’s children. If a child is acting as the attorney for property for his or her parent, this may be a case where the child is giving instructions to an advisor on the parent’s behalf, but an attorney for property (whether it is a child of the client or otherwise) cannot give a lawyer instruction to change his or her parent’s will. If the child is a trustee of a family trust, alter-ego trust or joint partner trust, this is another situation where the child may have the authority to deal directly with the advisor and provide instructions to him or her, depending on the terms of the trust.”

We see often in the show that Logan Roy values his personal legacy above his children. Is that something that happens with clients in your experience? If so, how might relations with next-gens affect their legacy?

“I would not equate this scenario with valuing their personal legacy over their children, but there are certainly circumstances (again, often with ultra-high-net-worth clients in particular) where a client leaves the majority of his or her assets to a charity or charities and leaves a smaller portion to his or her children. Clients who are extremely wealthy may feel that leaving their entire estate to the next generation would disincentivize their children to make their own living, or otherwise be problematic if a child has access to such substantial funds (this could be particularly problematic where a child has substance abuse issues).

It may not be appropriate in all circumstances, given the family dynamics, but in many circumstances it can be very valuable for parents to have open dialogue with their children about their succession planning. This allows children to ask their parents any questions they may have while their parents are still alive to speak to this and can help avoid surprises when it comes time to administer the estate on the death of the parent.

This can be especially helpful where there is a family business, as is the case in Succession, whereby there may be a more complex ownership structure in place. For example, many business owners may have one or more operating companies, holding companies, and family trust(s) in place among their other assets, and may have engaged in complex planning, like an estate freeze.

Business owners in Ontario typically have more than one will in efforts to minimize estate administration tax (probate tax) payable at death (commonly referred to as a Primary and Secondary Will or Personal Will and Corporate Will). Oftentimes, for business owners in particular, there is also a great deal of post-mortem (post-death) tax planning that has already been discussed and considered by clients with their advisors as part of the bigger plan.

It is common for one or more children to be more involved in the business than others, and the client may want to distribute their assets in what they feel is the most equitable way possible, bearing in mind that this may not mean an equal distribution of all assets, given the involvement of some children in the business and thus their contribution to the business’ value. Discussing this distribution and why the parent considers it equitable in light of such factors may help avoid hurt feelings where some children may otherwise be expecting an equal distribution of the parent’s assets at death.

Where a parent expects that the next generation will carry on the family business, having these conversations is also a great opportunity for a parent to speak to any more specific wishes he or she may have regarding the management of the business after his or her death. Although a parent cannot “rule from the grave” regarding the day-to-day management of the business after they are gone, it can be very helpful for the children who will be running the business after the parent’s death to know of any wishes their parent may want them to honour with respect to carrying on the legacy of the family business and can also provide the parent with peace of mind.

A letter of wishes may also be considered as a way to express more specific wishes in this regard, provided these should be carefully drafted and should be reviewed by the client’s lawyer to ensure the letter does not inadvertently revoke the client’s will.”

In the show, there is a complex scenario where Logan’s second wife, Marcia, who is not the mother of his children, has been given two votes within the family voting trust; there is a distant cousin, Greg, and about-to-be-ex-husband, Tom, of only-daughter, Shiv, and sons Connor, Kendall and Roman, who all seek power within the company. What do you recommend to a client with a family dynamic as complex when it comes to estate planning?

“Everyone, and particularly those with complex family dynamics, should seek the advice of an estate planning lawyer to ensure their will(s) and other estate planning tools (e.g., family trusts, powers or attorney, life insurance plans, corporate succession documents, etc.) are up to date.

In the course of estate planning, documents which are outside of the scope of the estate planning practice but nonetheless inform the estate plan may also be recommended, such as a cohabitation agreement or marriage contract.

Estate planning documents are organic documents that should be reviewed regularly. I generally recommend clients review their estate planning documents at least once every three to five years, absent extraordinary circumstances such as a birth or death in the family, significant change in net worth, or change in residency of the client or any of their trustees or beneficiaries.”

Peter Jaskiewicz, academic director of the Family Enterprise Legacy Institute (FELI) at the Telfer School of Management at the University of Ottawa, and Katrina Barclay, executive manager of FELI

We know that estate planning and succession planning can overlap. In the area of estate planning, how common is it – as with Logan Roy in the pilot and second episode, where the Roy siblings are negotiating with the family counsellors and lawyers whilst their father lies comatose due to a brain hemorrhage – for a patriarch to avoid planning his estate and leave the debris for his children to clean up?

“Unfortunately, it happens that estate and succession planning doesn’t take place until it’s forced upon the family, such as when the family patriarch or matriarch dies or becomes ill. Moreover, it is common that only an estate plan exists, however it has not been communicated. This kind of situation can trigger panic as everyone attempts to understand or figure out their new roles and responsibilities, and there is a lack of proper preparation for what is to come. Family members in these situations often also do not know where to find support to navigate this tough situation and their stress and differing opinions quickly can lead to emotional conflicts.

In the case of Logan Roy falling into a coma, it is not so much a succession plan that is needed but a contingency plan. A contingency plan is set up to deal with unlikely or unexpected – yet possible – events. Such a plan is needed when the ‘fire alarm’ goes on. In this scenario, every individual needs to know what to do to protect the family and the business from an imminent disruption. Once the fire is extinguished (i.e., the crisis is resolved), the next step would be to discuss and, if needed, revise the succession plan. In the case of the Roy family, we know that Logan Roy recovered and resumed his previous roles. Therefore, succession did not happen. However, such a health scare is often a trigger for fruitful discussions in families about how to plan and prepare for the continuity of the family business.

Conversely, suddenly inheriting a business can set up the successor (or the group of successors) and the family business for failure. If a next generation member is suddenly thrust into a role they’re not ready for – and perhaps they don’t even want – it can be a tremendous burden for these individuals. In some cases, these individuals are thus unwillingly set up for failure. In extreme cases, where their lack of experience and training undermines the business, they often feel very guilty because they could not live up to the expectations thrust upon them. They experience a personally challenging time that also often fuels severe conflicts with other family members. In some ways, the triggered event becomes the perfect storm, and they end up in the middle of it.

And these can be great businesses which employ many people, deliver an important product or service, and make a difference to their community and the economy at large. And it’s not even the fault of that next-generation member – they weren’t properly educated or empowered to enter that role. You need some swimming lessons before somebody throws you into the water.

In addition to inheriting a business, even the inheritance of vast amounts of wealth can have negative consequences. I recognise that this might sound surprising to some people – how could suddenly inheriting millions of dollars be negative in any way? With so much poverty and suffering in the world, I see how that can seem like a very privileged thing to say – but it can be very negative. It can hurt lives and push families apart – especially when they did not talk about their wealth, when they do not know how to deal with it, when they did not know about it, and when they are not sure of its purpose.”

We see often in Succession that Logan Roy values his personal legacy above his children. Is that something that happens with clients in your experience?

“No, it’s not something we see regularly. We find most family enterprise owners are more focused on the business and the family continuing for generations than they are in their own personal gain or legacy.

Family businesses tend to see far into the future – we call this long-term orientation. However, it is also true that some individuals might be narcissistic and thus inclined to focus on the satisfaction of their own needs and their own presentation. In some cases, key owners’ or leaders’ narcissism can lead to severe repercussions for their families and the family business. That said, it is far more common that members of the senior generation want to set up the next generation for long-term success, but they do not always know how.

And this is the tricky part. Most owners want their business to continue, but many fail at preparing the next generation for continuity across generations. You might be great at running a business, but that doesn’t mean you’re great at passing that business on. And this should not be surprising because you might have 30 years of experience in running and growing a business, but you will only pass on the business once. Moreover, the next generation will only go through the process of assuming control of a business once that is passed on to them.

You need two to tango, and this is part of what we’re doing at the Family Enterprise Legacy Institute (FELI) – we’re trying to bridge that gap and help ease the transition from one generation to the next by educating and empowering the next generation. Many advisors out there spend most of their time and effort on the senior generation but aren’t including the next generation, even though they are the future. That is also why we worked with over 100 next generation members to collect their most pressing 35 questions and involved the global family enterprise community to provide succinct responses to their questions in the book Enabling Next Generation Legacies – 35 Questions that Next Generation Members in Enterprising Families Ask.”

In the Roy family, there are complex competing power plays by different members of the family resulting in a toxic dynamic. What do you recommend to a client with a family dynamic as complex as Logan Roy when it comes to estate planning?

“We don’t do estate planning. But, among other topics, we do support self-reflection (e.g., Who am I? What are my values? How do I fit in?), teach how to set up fair process in the family and the business, train conflict management techniques (i.e., conflicts often cannot be avoided but they can be managed effectively), and nurture effective, direct, and transparent communication. The latter is a foundation for managing growing families and enabling their members to make effective decisions and lead fulfilled lives.

The lack of effective communication is the No. 1 reason for rampant family conflicts and the decline of many family businesses. Its absence is often the root cause of conflict – but, once put in place, it often is a part of the solution to a lot of conflict. In our work and research, we see the inability of people to listen to each other, the dangers of carrying around old family baggage, the inability to forgive issues long passed, and also a lack of interaction and shared time that undermine trust and can lead to further division.

It’s important for families to get together, talk and try to address their lingering issues; drawing on an experienced family business facilitator or advisor to help them navigate such a process is critical. Conversely, not talking about some hurt or misunderstanding won’t solve it. Instead, such baggage will accumulate over time and eventually erupt in tensions or conflicts.”

Don Steele and Patrick O’Connor, partners at Blackwood Family Enterprise Services

We know that estate planning and succession planning can overlap. In the area of estate planning, how common is it – as with Logan Roy in the pilot and second episode, where the Roy siblings are negotiating with the family counsellors and lawyers whilst their father lies comatose due to a brain hemorrhage – for a patriarch to avoid planning his estate and leave the debris for his children to clean up?

“The maneuvering and negotiations between family members and their advisors after Logan’s stroke had more to do with a lack of clarity around leadership and strategy for the family business than about how Logan’s assets would be dispersed had he died. Accordingly, I’d consider this a failure of succession planning, as opposed to estate planning.

That said, it is quite common that the founders of successful family businesses find it difficult to relinquish control, given that building the company has defined so much of their life and identity. It’s particularly difficult for them to think about giving up control if they feel that their children are not quite up to the task of running the business. Consequently, even though they understand at some level that leadership will have to pass to one or more of their children ‘one day,’ it can be very difficult for them to commit to exactly when that day will be. So, the actual planning and preparation for succession either doesn’t happen at all or doesn’t happen effectively, with clarity and consensus in the family.

Unfortunately, this lack of planning often leads to the sale or liquidation of the family business when the patriarch dies or becomes permanently incapacitated, and can cause enormous, sometimes permanent, damage to the family as well.

However, it’s also important to recognize that there are a growing number of business families who are extremely thoughtful, transparent and intentional about succession planning, and begin the grooming process with rising generations many years in advance so that their skills and confidence (as well as senior generations’ confidence in them), are where they need to be when the ‘day,’ which is known well in advance, finally comes. As you might expect, these families tend to be much more successful at transitioning leadership generally and are much better prepared to respond to unexpected crises.”

We see often in Succession that Logan Roy values his personal legacy above his children. Is that something that happens with clients in your experience?

“For the founders of many family enterprises, the businesses they’ve built, which will become the legacies they will leave behind, are integral to their own identity, so the emotional ties to the business are understandably very strong. In fact, the emotional connection with the business can often be as strong as the emotional connections founders have with their own children. That being the case, patriarchs of business families can find it difficult to relinquish control of their companies and allow rising generations more influence in decisions that could fundamentally alter the company, and with it their legacy, even when economic or competitive conditions call for it.

We find that the key is really tapping into a family’s core mission, vision, values and goals and that engaging rising generations in these discussions drives a richer and more sustainable legacy. With that in mind, we spend a lot of time working with families to help senior generations pass down these core values so that the legacy is no longer just theirs but becomes a shared thread that carries through the generations, enabling them to build their family legacy collaboratively and to develop succession plans with greater confidence and less acrimony.”

Responses have been lightly edited for clarity and length.

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