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The Logan Roy Succession Plan: learning from mistakes

“Who do you think Dad actually wanted to give it to?” – Roman

“I don’t think Dad gave a f*** about anything more than putting one foot in front of the other.” – Shiv

Charles Russell Speechlys Succession Watch: Episode 10

HBO’s Emmy-winning show ‘Succession’ came to a climactic conclusion this week in the final episode of season 4, thus ending our Charles Russell Speechlys Succession Watch series. We have thoroughly enjoyed deliberating on the legal issues arising from the show and the interplay between both personal and family affairs, and the wider commercial interests. We hope you have too.

“I don’t think he wanted to give it to any of us,” Roman said to Shiv, in a rare genuine moment – and ultimately their father got his wish. After catching a brief glimpse of a potential unison between Kendall, Shiv and Roman, in true Succession-style the opportunity to retain control of their father’s company slipped through their fingers at the final board meeting. In many ways a messy scramble for power was inevitable; Logan promised each of the siblings the keys to the kingdom, left an unclear and inconclusive letter of wishes, and died with his affairs very much still in question.

For our final Succession Watch article, we consider Logan Roy’s succession planning (or lack of) throughout the seasons and how, if he had a second chance (and the benefit of advice from the private client team here at Charles Russell Speechlys) he might have managed his affairs differently.

Succession Planning

“He said it should be me.” – Roman

“Well he offered it to me Roman.” – Shiv

“He f***ing promised it to me. Promised.” – Kendall

From the dubious question of whether Kendall’s name had been crossed out or underlined, to Roman’s late-night meeting with his father before his death, to Shiv’s unborn child being the only one to continue the Roy family “bloodline”, each sibling believes they have a claim to their father’s crown. Throw half-siblings, desperate cousins, ex-wives and rocky marriages into the mix and there is clearly much that Logan could have done to plan for a smoother administration of his affairs after his death (although whether this is what he wanted is another matter entirely).

Starting to consider succession planning during your lifetime is essential to help ensure that, after your death, assets pass in accordance with your wishes, no matter the complexities of family dynamics or family businesses. Succession planning should be tailored to an individual’s circumstances and priorities, for example with the aim of passing your estate to your heirs in a tax efficient manner, ensuring that younger generations of your family do not inherit large sums before they are financially mature, or protecting your assets from potential third-party claims from creditors or on divorce.

While we do not know the precise details of Logan’s Will or his wider estate planning arrangements, leaving his estate in a discretionary trust established by his Will would have allowed him to choose who could benefit and set the parameters of his trustees’ powers, while still affording his trustees the discretion to decide how the beneficiaries should benefit depending on relevant circumstances. For example, Logan might have chosen to include Tom, his son-in-law, among the class of beneficiaries of the trust, while noting in his letter of wishes that, should Tom and Shiv divorce, he would not wish Tom to receive any form of benefit from the trust. Likewise, if Logan doubted Willa’s motivations for marrying Connor, he could have chosen to leave her out of the class of beneficiaries and express a preference in his letter of wishes that the trustees consider making loans, rather than outright gifts, of trust assets to beneficiaries (including Connor), effectively minimising the scope for trust assets to form part of Connor’s estate, and therefore be fair game in any matrimonial dispute should Connor and Willa divorce. Looking to the next generation, if Logan had particular views on the age at which his grandchildren should receive distributions from the trust (perhaps in the hope of avoiding some of the mistakes made in raising his own children), these too could be specified in a letter of wishes.

While not legally binding, Logan could have prepared this letter of wishes (ideally a dated one without subsequent pencil notes and crossings-out) to serve as guidance for his trustees as to his overarching wishes for how the trust should be administered as described above. Instead, we saw how Logan’s letter of wishes added further complications to his succession, and our analysis of this can be found in our Succession Watch Episode 4 article.

A discretionary trust set-up such as this can also be attractive for an individual such as Logan with a high profile and complicated family dynamics, in that it offers a degree of privacy as to his estate planning arrangements. Once grant of probate has been issued, a Will becomes a public document in the UK, and anyone can apply to receive a copy. Leaving your estate in trust means that details of specific assets or possible family disputes remain private.

Ensuring Business Continuity

“It mattered to him. He wanted this to go on.” – Kendall

If there is one thing that we know for certain from watching Succession, it’s that the running of Waystar Royco was fairly chaotic. It wouldn’t be good television if it was all smooth sailing and perhaps, to a degree, such chaos at boardroom level can be expected at a multi-billion-dollar media conglomerate. This storm, however, could have been calmed if Logan had provided greater certainty over the leadership transition, and what should happen to the company after he is gone.

For majority shareholders, transitioning control over a UK private limited company would require a specific gift in one’s Will of the voting shares of the company. It is important to take into account any classes of shares that may exist, whether certain shares hold voting rights or dividend rights (or both) and therefore which specific type of shares the testator wants to gift to whom. If the testator leaves their shares in their Will to a beneficiary, upon their death the title to the shares will vest in the executors by operation of law (known as a “transmission” of shares under Model Article 27), allowing the executors to transfer the shares to the ultimate beneficiary under the Will. If there is no Will, legal title to the shares cannot vest in the administrators of the estate until a grant of probate has been received, and until then the deceased assets vest in the Public Trustee. These procedures will be subject to the company’s Articles of Association, whether as Model or Amended Articles (since specific amendments or substitutions made by the company may state a different procedure). It is worth noting that Business Property Relief may be available on shares in a private “unquoted” company which could attract 100% relief from Inheritance Tax.

A lifetime gift of the shares before the shareholder’s death may also be an available option if planned carefully. This would require a careful review of any transfer restrictions in the company’s Articles of Association to ensure that the transfer is effective, as well as consideration regarding the tax implications of stamp duty, capital gains tax and inheritance tax.

In terms of the ongoing running of a business after the death of a founder, a well-constructed letter of wishes can provide some clarity for the executors and if a testator has particular views on who should be on the family board of directors, or who should fill certain positions within the company. A letter of wishes which indicated Logan’s wishes could have minimised some of the fall-out that we witnessed.

One final point is that communication can go a long way. Logan was often only up-front about matters once someone had found out (without him knowing) and confronted him directly about it. We also saw a lot of individuals with varying powers and influence attempting to steer the ship. Multiple players wielding substantial power and influence can often lead to clashes and disputes over how things should be done. In contrast, good communication should aim to keep all those who stand to benefit under a Will or trust included in the conversation, for example by having regular meetings or a family charter about plans for the running of the company, how it is going to be managed and by whom, and for resolving disputes. For any trusts, clarity over which powers are bestowed upon the trustees, protectors and the beneficiaries should ensure that balance is achieved and that the structure of the trust itself is robust. Ultimately, good communication provides relevant transparency and can help to avoid conflict and disruption.

Appointing Executors and Identifying the Estate

“Honestly I’m just trying to guide us through the years to some truth here, man.” – Kendall

Though he has been appointed executor, Frank does not seem to have taken to the role with much alacrity this season, which is a worrying sign for Logan’s estate.

The role of the executor is extremely important: it is an executor’s role to ensure that the administration of the estate of the deceased is dealt with appropriately, taking into account the deceased’s wishes. In England, one of the executor’s immediate responsibilities is to register the death, following which they arrange the funeral in accordance with any specific wishes. The executor must then ascertain the deceased’s assets and liabilities and on the basis of these, value the estate; a job undoubtedly made more complex by the nature and complexity of Logan’s estate. Lest we forget, Logan is also the not-so-proud owner of the Scottish football club, Heart of Midlothian FC, after Roman bought the club for his father back in season 2, forgetting that Dundee-born Logan actually supports their rivals, Hibernian FC. As executor, Frank would be responsible for dealing with this and any other overseas assets of Logan’s, unless Logan had dealt with these assets separately.

In an estate where the main asset is a family business, it might be a good idea to appoint someone with knowledge of the corporation or industry, in order to make the job of post-death administration simpler. Similarly, many people choose a professional such as a solicitor as an executor, given their knowledge and expertise in tax and legal affairs. However, above all, an executor must be somebody that the deceased trusts: it is their job to follow the deceased’s Will and to administrate the estate fairly, being the arbiter of any disagreements. This level of trust becomes all the more important if the deceased’s Will establishes any trusts of which the executor is also appointed a trustee.

An executor has the choice to renounce their appointment, but if they ‘intermeddle’ with the estate, this will not be possible. ‘Intermeddling’ is defined as handling the deceased’s assets (such as passing an asset to a beneficiary or running the business).

Chattels

“Affix your stickers on objects you covet.” – Connor

We do not know whether Connor was appointed as one of his father’s executors but, assuming that he was not, overseeing the “sticker perambulation circuit” by which he and Logan’s other heirs staked their claim to the family heirlooms could have constituted intermeddling (explained above), as intermeddling also covers the actions of those who hold themselves out as acting in the role of executor. This is a particular risk, as an executor becomes personally liable for the financial aspects of the estate administration.

A further red flag is Connor’s decision to cherry-pick the items that he wishes to keep. Unless specified in Logan’s Will, Connor may not have preference over other beneficiaries who are also entitled to Logan’s chattels. In addition, an executor is also liable for ensuring that assets are sold for the best price: a failure to do so could result in personal liabilities. There is often a real difficulty in valuing certain chattels such as artwork, medals, and antiques. An executor must take this into account when dividing the value of an estate between beneficiaries (in the absence of any specific legacies or instead of liquidating these chattels).

Conclusion

Our Succession Watch Team across the firm has loved having the opportunity to share our thoughts on each episode of the final series and tackling headfirst the legal issues involved. The show, and this series in particular, has highlighted the importance of carefully navigating succession planning in the 21st century, particularly for high-net-worth families with substantial assets and shareholdings.

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