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Downton Abbey: Real Life Lessons for Trust and Estate Advisors

The following commentary is extracted from an article written by Joshua Baron and Devin Bird published in Trusts and EstatesIn real life, far from the TV world of post-Edwardian England, business families can find themselves in the same circumstances as those of the beleaguered Crawley family. Consider estate planning. In the TV series, the Earl doesn't leave the estate to his eldest daughter but, having no son, passes it on to Matthew, an unknown relative. He's forced to do so because English laws at the time required a male heir.

Although primogeniture is no longer in effect in most countries today, it's not uncommon for families to choose to operate under similar restrictions. For example, some business families only allow male family members to be owners. This arrangement is usually established with the intention of reducing future conflict in the family. Unfortunately, it can have the unintended consequence of excluding some of the talented leaders in the next generation who are female.Understandably, family business owners often wish to keep the business, and sometimes management, in the family, and so they try to restrict future ownership to bloodline relatives. To endure and remain competitive, however, each generation requires at least one talented and driven leader. There's no guarantee that blood relatives will have the necessary vitality and energy. Sometimes, the passion and ideas can come from the outside, for example, from in-laws. That's what happened in the Canadian company Bombardier Inc. and its recreational BRP division, which has subsequently been spun off. When the founder died in his 50s, it was the founder's son-in-law who transformed the business from a pioneering, small snowmobile company into a global airplane, locomotive and recreational company, with combined revenues of some $20 billion. Even in a make believe world, succession isn't easy. Downton Abbey reminds owners of assets, and the advisors who counsel them, that caution should be exercised in placing too many restrictions on who can be owners in the future. There may be good reasons for the restrictions, but full understanding of what could happen is crucial.Trust and estate advisors like themselves can serve our clients well by doing scenario planning with you about how such rules/restrictions could ultimately play out in ways that hadn't originally been intended.

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