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Business News/ Money / Q&a/  What should be done for smooth transition of family business?
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What should be done for smooth transition of family business?

A detailed succession plan outlines the principles, policies, and procedures for transferring business ownership

Regular reviews and updates to the succession plan are essential to adapt to changing circumstances and dynamics within the family and the business.Premium
Regular reviews and updates to the succession plan are essential to adapt to changing circumstances and dynamics within the family and the business.

What steps should be taken for a smooth transition of ownership in a family business?

—Name withheld on request

A detailed succession plan outlines the principles, policies, and procedures for transferring business ownership. It addresses key aspects such as leadership succession, shareholding patterns, and the role of family members in business operations. Utilizing instruments like buy-sell agreements or creating a family trust can provide a structured approach to ownership transition.

Regular reviews and updates to the succession plan are essential to adapt to changing circumstances and dynamics within the family and the business. Seeking legal counsel periodically ensures that the plan remains legally sound and aligned with current regulatory frameworks.

When an individual owns digital assets such as cryptocurrency and online accounts, what legal considerations and safeguards should be put in place to facilitate the seamless transfer of these digital assets to heirs upon the individual’s demise?

—Name withheld on request

To safeguard digital assets effectively, individuals must incorporate specific legal measures into their estate plans. This involves maintaining a detailed inventory of digital holdings, including cryptocurrency portfolios and NFTs, prescribing clear instructions in an individual’s will and appointing a digital executor or trustee explicitly designated to handle these assets.

These instructions should encompass access details, such as cryptographic keys for digital wallets, ensuring that personal administrators can navigate the complexities of proving ownership and accessing digital assets.

Practical steps, such as securely storing information necessary for accessing digital assets and utilizing platforms like Apple’s digital legacy system, play a pivotal role in facilitating a smooth transition. The system allows users to designate someone to inherit access to their digital assets.

Additionally, considering potential challenges in proving ownership, the comprehensive inventory and explicit instructions serve as critical safeguards. As regards assets held in cryptocurrency wallets provided by different platforms, executors or personal administrators must be granted access to cryptographic keys, emphasizing the importance of securely storing this information.

Aditya Chopra is managing partner, and Amay Jain is senior associate, Victoriam Legalis, Advocates & Solicitors.

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Published: 30 Jan 2024, 10:22 PM IST
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