The succession planning conversation you should have before retirement

Succession planning should begin long before a founder steps aside: Families that delay difficult conversations risk conflict, fragmentation, and even the loss of business value, Lamyaa Gadelhak, at Baker McKenzie Cairo (Helmy, Hamza & Partners) focusing on Wealth Management offerings in the Middle East, Phyllis Townsend, partner in Baker McKenzie’s Wealth Management practice in London and EMEA Wealth Management practice group lead, and Sagui Hamed, founder and managing partner of Square Capital Group, tell EnterpriseAM.

Don’t wait for a trigger: Succession planning should begin “as soon as possible,” Townsend says. Founders often focus on building their businesses and leave succession planning until later, but she describes it as a “missing piece of the puzzle” that is best considered while the business is still growing rather than waiting for a liquidity event or another trigger. Hamed takes an even broader view, arguing that founders should think about continuity from the moment they start a business. “The minute you step into a business, you have to think of continuity and succession,” she says. Bringing the next generation into the conversation early can also reduce the risk of future disputes by ensuring family members understand where they fit within both the family and the business.

A business should be able to survive its founder: “I think not planning at all is the biggest mistake you can make,” Townsend says. Gadelhak notes that many businesses across the Middle East and Africa have been divided after a founder’s death because succession was never properly addressed, damaging both family relationships and business continuity.

Avoid copy-paste solutions: Families should not assume that a structure adopted by another family will work for them, Gadelhak says. The right solution depends on the assets involved, family dynamics, and long-term objectives.

Build continuity into the business itself: Founders should focus on ensuring a business can continue operating without them through strong management teams, governance structures, and clear processes, Hamed says. “The business has to continue anyway whether I am part of it or not.”

Preserving businesses and wealth

Preserving value is often more important than dividing assets equally: Allowing ownership to become fragmented can make it more difficult to preserve both businesses and wealth, Townsend says. Gadelhak notes that there is no universal answer to whether assets should be divided among heirs because the right approach depends on both the nature of the asset and the family itself.

Some assets lose value when fragmented: “Some assets, if fragmented, lose their value, and then it will be a loss for everyone,” Gadelhak says. Families must also consider who is capable of continuing a business, whether there is a natural successor, and how responsibilities will be managed in the future.

Have difficult conversations while the founder is still alive: Founders often have the clearest understanding of both the family and the business and usually have a vision for how the business should continue after them, Gadelhak says. If disagreements are unavoidable, it is generally better for them to happen while the founder is still alive, Townsend says. “Once the founder has gone then the family can descend into infighting and litigation.”

Manage expectations early: Families that successfully preserve wealth across generations tend to communicate openly and manage expectations early, Townsend says. “Most disputes arise when the expectations of certain family members are not met.”

Start financial conversations young: Hamed argues that conversations about saving, investing, and stewardship should begin from a young age so future generations understand both the opportunities and responsibilities that come with inherited wealth.

The legal complexities

Cross-border wealth can complicate succession: Families with assets spread across multiple countries must navigate different legal systems, reporting requirements, disclosure obligations, and operational considerations, Gadelhak says. Real estate is generally subject to the laws of the jurisdiction in which it is located, while financial assets may sometimes be held through structures such as trusts, Townsend notes.

Poor planning can leave heirs facing unexpected challenges: Without proper documentation and structuring, heirs may have to trace assets across multiple jurisdictions and, in some cases, may not even be aware that certain assets exist. Without proper planning across key jurisdictions, families may have to wait for one legal process to conclude before another can begin, and winding up an estate can sometimes take decades, Townsend says.

Trusts remain one of the most powerful succession planning tools: Trusts centralize ownership while separating it from beneficial interests, allowing family members to benefit from assets without directly owning them, Townsend says. This can reduce fragmentation after a founder’s death and help preserve businesses and wealth across generations.

The concept has deeper roots than many realize: While trusts are most commonly associated today with common law jurisdictions, Gadelhak notes that the concept has historical roots in the Islamic institution of waqf. “Funnily enough, a fun fact is that the trust historically comes from the Islamic structure of waqf,” she says.

Modern trusts and waqf serve different purposes: While Egypt still recognizes waqf, it is regulated through a different framework and does not function as a modern succession-planning tool in the same way trusts do.

Trusts are not a one-size-fits-all solution: Egypt, among other jurisdictions, does not recognize trusts under domestic law, meaning families typically rely on offshore structures where appropriate, Gadelhak says. The right structure depends on the nature of the assets, ownership restrictions, tax considerations, and the family’s objectives.

Careful structuring is essential: “It’s not as simple as ‘creating a trust that in turn owns the assets, or automatically moving assets into the trust,’” Gadelhak says. “It’s an exercise that requires specific and elaborate legal advice, requires tax assessment because it needs to be tax-efficient as well, particularly when it involves multiple jurisdictions.”

Awareness is growing, but implementation remains slow: Awareness of succession planning among Egyptian and Middle Eastern family businesses has increased significantly over the past decade, according to Gadelhak. However, implementation often lags because succession planning is a complex legal, tax, and structuring exercise.

Global families require ongoing reviews: The challenge is becoming more pronounced as more family members live, study, and work abroad. Townsend says she has seen families revisit succession plans after relatives moved to the US, requiring structures to be reconsidered and updated.