No one likes to think about dying — and that is why most Kenyans probably lack wills.
But lately, stories of siblings fighting for the control of family-owned companies have played out in public, leaving spectators wondering why better solutions to domestic problems could not be sought.
Most of the family feuds involve push for control of wealth or when a member feels left out in the distribution of assets.
The feuds are, however, a result of lack of proper planning by the founding member.
Anne Agimba, a commercial lawyer specialising in family businesses, trusts and wills, said proper planning involves leaving behind proper documentation indicating how the family wealth and roles where a business is involved will be distributed.
Written or oral will?
The founding member of a family business can opt to write a will or establish a trust. A will takes effect after the founder’s demise while a trust comes into play immediately it is written.
“It lists someone’s assets and wishes in terms of how they will be distributed. The court comes in to ensure that what is written is enacted. Only properties that are owned by the subject are listed on the document, and it is difficult to disinherit children or a wife using the document because it can be challenged,” she said.
An oral will is valid where there are two witnesses and the subject dies within three months of the declaration.
A trust on the other hand is a private document written by a lawyer and goes deeper into estate planning, and its content can bear some or all the assets.
It draws the founders wishes down to the specifics unlike the will, for instance, who is next in line at the helm of the family business. Where other members are subordinates, they are written down and their roles spelled out.
“It can be written to give directions—people not benefiting directly because you have died you leave behind instructions on how they can circumvent their lives while you are not present. Leave instructions for them. It helps as the family doesn’t feel alone and sad. There is less acrimony if instructions have been left,” she said.
Ms Agimba said, a trust can, for instance, have a clause that dictates that proceeds of a particular property be directed into taking care of school fees of members of the family.
While there are mechanisms that can be employed to ensure continuity of family businesses or that feuds do not arise, many Kenyans are not keen to seek legal help or options that can help in drafting of a will or a trust.
“There is too much trust on families—that when they are left behind they will do as they are required/morally right. Procrastination is the other big issue because people are oblivious of dangers that we are all faced with every day, no one is certain about the day they will die,” she said, citing that cost should never be a factor.
Only a small percentage of Kenyans have drafted a will or trust leaving families at the mercy of justice system in case of death.
Succession structures are integral in ensuring continuity of family businesses and that those left behind co-exist peacefully.
According to the 2016 Next Generation Survey by PricewaterhouseCoopers, only 23 per cent of Kenyan enterprises have a succession plan in place.
This means that should the founders die, the heirs will be left to agree on the member to assume the position. It could also mark the beginning of a tedious court battle to decide who will take over the business.
Handing over the family business and relinquishing all responsibilities also continues to be a hard task for founders as 61 per cent are finding it hard to let go while 52 per cent are concerned that they will spend more time managing family politics.
The founders and next generation heirs different perspective on leadership, succession planning and governance are the other greatest impediments while running a business.
According to the survey, 69 per cent of the next generation prefer to bring in non-family managers, expand into new geographic market (60 per cent) and diversify products and services (59 per cent) while about 47 per cent prefer to establish a new entrepreneurial venture. Most founders prefer to stick to the original business plan and not to bring in outsiders.