Key takeaways
- Succession involves three matters that must be planned separately: who manages, who owns the shares, and where the money will come from on the day of handover.
- The risk most often overlooked is what is tied to the founder personally, such as authorised signatories, guarantors, land held in a personal name and key relationships.
- Check inheritance tax and the company's ability to buy back shares before dividing anything.
The father, aged 68, still comes into the office every day. He is still the only person who knows which plot of land is mortgaged to which bank. He still signs the cheques and is the one who phones the major customers. Everyone knows that one day the business will change hands, but no one wants to raise it at the dinner table. One child may have no interest in the business at all, and the right-hand man of twenty years has no replacement.
A succession plan is like planting a tree: you have to prepare the soil and water it for many years before you can rely on its shade. If you start only when the founder suddenly falls ill, every decision will be made when the family is at its most vulnerable.
Separate the three questions
| Questions | What must be decided | Common mistakes |
|---|---|---|
| Who manages | The next CEO, qualifications, handover timeline | Choosing by age order rather than ability |
| Who owns | Shareholding proportions, voting rights, share sales | Splitting shares equally with no mechanism to break a deadlock when views differ |
| Where the money comes from | Tax, share buy-back, the founder's retirement income | Assets of high value but no cash |
Giving shares to all the children equally looks fair, but if only one of them works hard in the company while the other two wait for dividends, conflict is almost written in advance. One option is to separate the rights: for example, the managing child holds the shares that control decisions, while the others receive assets or cash flows of comparable value. Which structure works must be reviewed by a lawyer against the law and the company's articles of association.
Map what is tied to the founder
| Topic | If the founder were gone tomorrow | Action required |
|---|---|---|
| Signing authority | Transactions and payments may stop | Add authorised directors and back-up signatories |
| Personal guarantees | The bank reviews the credit line or asks for new collateral | List all guarantees and talk to the bank in advance |
| Land in a personal name | Assets the business uses become part of the estate | Put a lease in place or restructure the holding, checking the tax first |
| Customer and bank relationships | The main contact disappears, and the trust goes with them | Introduce the successor and the team from today |
| Knowledge held in people's heads | No one knows the old agreements | Record contracts, verbal agreements and the various access codes |
Inheritance tax applies only to the portion exceeding THB 100 million after deducting debts that pass with the estate, at a rate of 10%, or 5% for ascendants or descendants. The return must be filed within 150 days of the date the inheritance is received (information from Revenue Department documents, checked in November 2026). Lifetime gifts have their own tax thresholds, and transferring shares or land also carries other taxes and fees. Check the current law with advisers before acting.
Example: is there enough cash if shares are split equally?
A hypothetical example: the net estate is shares in the company worth THB 360 million, and each of the 3 children receives THB 120 million. Only one child manages the business and wants to buy the shares of the other two siblings. The company has free cash flow before debt service of THB 45 million a year and repays bank debt of THB 20 million a year. This calculation excludes interest on instalment payments for the shares and tax on the share sale.
| Item | THB million |
|---|---|
| Inheritance tax per person ((120 − 100) × 5%) | 1.0 |
| Total inheritance tax for 3 people | 3.0 |
| Purchase price of the 2 siblings' shares | 240.0 |
| Cash remaining after bank debt repayments per year (45 − 20) | 25.0 |
| Annual share purchase instalment, if paid over 8 years | 30.0 |
| Annual shortfall, if paid over 8 years | (5.0) |
| Annual share purchase instalment, if paid over 10 years | 24.0 |
| Annual surplus, if paid over 10 years | 1.0 |
A tax of only THB 3 million is not this family's main problem. The problem is the THB 240 million share purchase, which even over 10 years leaves the company almost no cash to invest or to weather a bad year. This constraint should be visible at the planning stage, not when the will is opened.
A workable timeline
- Start: discuss the founder's goals, map what is tied to the individual, and have a lawyer review the will and the articles of association.
- Prepare people: put in place the successor and back-up positions, both family members and professional managers.
- Hand over the work: transfer authority in stages, so that the bank and key customers get to know the successor.
- Transfer ownership: arrange the share structure, the shareholders' agreement and an internal share buy-sell mechanism.
- The founder changes role: set retirement income and a role that does not overlap with the new CEO.
Next steps
- List everything tied to the founder, then name a back-up for each item
- Gather the list of assets, debts and guarantees in a single file
- Calculate the tax and the cash needed on the day of handover, and compare it with the cash flow available
- Have a lawyer review the will, the articles of association and the shareholders' agreement
- Set the actual date for starting the transfer of authority, together with measures of the successor's readiness
- Review the plan every year, or whenever the family or the business changes significantly