Plan Like the Royals

Just like the British Royal Family has a clear line of succession, your family companies should too. It’s about planning ahead so there are no gaps, confusion, or costly disputes.

Don't Let Your Company or Family Trust Collapse Overnight Imagine this: you’re the sole director of your business or trustee company. Things are running smoothly until one day, illness or an accident strikes, and you're no longer able to make decisions. What happens to your company then?

Unfortunately, for many Australians, this is not a hypothetical scenario, and the consequences of not planning for it can be devastating. That’s where a Successor Director comes in.

What Is a Successor Director?

A Successor Director is a nominated individual who can step in to take control of your company, either a trading business or a trustee company, if you lose capacity or pass away. This person is appointed before anything goes wrong, so that if the worst happens, your business or trust doesn’t grind to a halt.

Applies to:

• Trading Companies – e.g., running your family business, consultancy, or contracting services

• Trustee Companies – e.g., companies acting as the trustee for your family trust or SMSF.

What Happens Without One?

Without a Successor Director:

• No one is legally authorised to run the company

• Bank accounts may be frozen

• Staff can’t be paid

• Business contracts can't be fulfilled

• In trustee companies, trust distributions and decisions may halt entirely

• Family members are left scrambling through court processes (which can take months).

In short, your company or trust is paralysed at the worst possible time.

Real-Life Examples

Example 1: The Business Owner Who Lost Capacity

John, a 58-year-old business owner in Melbourne, suffered a sudden stroke. He was the sole director of his company. With no successor in place, his staff couldn't access the company’s bank accounts, and suppliers stopped deliveries. His wife spent 6 months in court just to be appointed as director. By then, the business was gone.

Example 2: Family Trust in Legal Limbo

Maria was the sole director of a corporate trustee for the family trust. When she passed away, the trust couldn’t make distributions to beneficiaries, including her grandchildren’s school fees. Again, the family had to go to court, and the trust assets were frozen for months.

Why Appoint a Successor Director?

1. Business Continuity - A successor can step in immediately to manage operations, access accounts, and honour contracts

2. Protection of Trust Assets - For family trusts and SMSFs, the trustee must act if there’s no director, the trust is paralysed and may breach its deed or compliance obligations

3. Avoid Legal Battles and Costs - avoid the time and legal expense of applying for administration through the courts

4. Protect Family Wealth - If your trading business or trust is tied to family wealth or income, don’t let it fall apart when you’re no longer able to act.

How to Appoint a Successor Director

• Update your company constitution to allow for successor appointment

• Sign a formal Successor Director Appointment document

• Nominate a trusted individual, this could be a spouse, adult child, or professional adviser

• Review annually, especially after major life events (divorce, death, sale of assets, etc.).

Tip: This works even better when paired with an Enduring Power of Attorney and a strong estate plan.

Next Steps

Too many families discover the importance of succession planning after it’s too late. Don’t let your wealth and hard work unravel because no one has the legal power to act.

We strongly recommend:

• Drafting and implementing a Successor Director Deed

• Reviewing your constitution and trustee documentation

• Ensuring it all aligns with your estate and succession plan

• Book a Family Wealth Protection Review

Talk to us today about ensuring your Successor Director strategy is in place. Because when it comes to protecting family wealth, waiting is the greatest risk of all.

Book a meeting

Nijo Antony

Director