Kingston, Jamaica — 19 July 2023
For family-owned businesses in Jamaica, estate planning is not a peripheral concern. It is the difference between a business that survives the death of its founder and one that does not. The absence of an estate plan, or a plan that conflates personal and business assets without clearly distinguishing them, is one of the most consistent causes of family business failure in Jamaica and across the Caribbean. The expressions heard among business owners, that they are too young to plan, too healthy to worry, or that raising the issue is an invitation for conflict, are precisely the attitudes that leave enterprises vulnerable.
Estate Planning versus Succession Planning
Estate planning and succession planning are related but distinct processes, and understanding the difference matters for business owners. Estate planning addresses what happens to assets on death: who receives them, in what proportions, and through what legal mechanism. Succession planning addresses who leads and manages the business after the current owner steps back, whether through retirement, death, or incapacity. For a sole proprietor, the two are deeply intertwined because the business assets are personal property and will be managed as part of the estate. For a family-owned company with multiple shareholders, separating the two is essential because the company continues to exist after the death of an individual shareholder, and who controls it going forward is a governance question as much as an inheritance one.
The most basic tool in the estate planner’s toolkit remains the will. A will that addresses the business interest, specifying who inherits shares, who has the authority to act as executor with respect to business assets, and what the testator’s intentions are for the enterprise, provides the foundation on which a more comprehensive succession plan can rest. Without it, the courts and the Intestates’ Estates and Property Charges Act make those decisions, with outcomes that may bear no relationship to what the business founder intended.
The Property Dimension
For many Jamaican family businesses, real estate is both a personal and a commercial asset. The business may operate from premises owned by the founder personally. Commercial property held in a sole proprietor’s name is part of the personal estate and subject to the same probate process as the family home. If that property is central to the business’s operations and the estate administration takes months or years, the business may not survive the wait. Structuring the ownership of commercial property through a company, or ensuring the estate plan clearly addresses what is to happen to the premises during the administration period, can make the difference between continuity and closure.
Starting the Conversation
The reluctance to begin estate and succession planning conversations in Jamaican family businesses is real, but the cost of not having them is consistently higher than the cost of having them. A family that has discussed succession openly, documented those discussions in a will and a shareholders’ agreement, and engaged legal and financial advisors to stress-test the plan, is far better positioned to survive the death or departure of its founder than one that has left those conversations for another day. The other day tends to arrive unexpectedly. The discipline of planning ahead, however uncomfortable, is what separates family businesses that last from those that do not.
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