Succession Series - House of the Dragon

17 April 2023

Nearly 10 million people tuned in to view the first episode of House of the Dragon late last year, the eagerly anticipated follow up series to Game of Thrones.

One of the main themes to emerge from the show was succession planning and the factors that impact important decision making. Associate Director, Chris Mourant has many years experience working with families and understands the importance of succession planning and the role that trustees provide. Read his article below: 

Those that watched Game of Thrones know that the series followed the lives of the different “houses” (or families). In the House of the Dragon, the series follows the Targaryen family whose family banner is that of a dragon, hence the series title.

To set the scene, the very opening monologue states that house Targaryen stood at the height of its strength with 10 dragons to its name – no other power in the world could stand against it. That said the King had reigned for over sixty years of peace and prosperity, but with his health failing he called a great council to choose an heir. Fourteen succession claims were heard but only two were truly considered – the King’s daughter and her cousin, the King’s eldest male descendent. Prince Viserys, the King’s eldest male descendent inherited the throne. The King had called the great council to avoid a Great War being fought over his succession for he knew the cold truth, “the only thing that could tear down the House of the Dragon was itself” (cue the dramatic music!).

This particular line stuck with me and got me thinking about how true this is when talking to clients about succession planning. Having travelled regularly to the Middle East over the last ten years I have begun to truly understand how much family dynamics play a role in decision making. Couple that with obvious generational differences that occur, and the ever-increasing evolution of technology, often makes for a difficult discussion.

There is often a clear undercurrent that heads of households are fully aware of the infighting that may occur after their passing but there is a real reluctance to talk about death – and why wouldn’t there be! Whilst historically the issue or outcome was reluctantly accepted, heads of the family are no longer prepared to leave matters to fate and to simply allow wealth to pass under Shariah inheritance principals. This is partly due to the numerous examples of families that have no clear succession plan in place prior to death, resulting in a rather public feud amongst the heirs with lengthy and costly legal disputes and in some instances the loss of the family business and wealth.

Family heads are increasingly becoming more aware that they have a duty to address succession issues during their lifetime so as to ensure that there is a clear mechanism to distribute wealth to future generations. This is exactly what the King was seeking by calling a great council to address the issue of succession and seek buy-in from all parties. Rather than relying on a great council to give guidance and pick a successor, Trustees are encouraging families to engage in conversations so that a clear succession plan is created. If this is done at a time when family leaders are in good health and with a full understanding of the strengths and weaknesses of their respective heirs, they can create a succession plan that allows the smooth transition of wealth to thier family. All too often the conversation is left until it’s far too late or in some instances not at all. Remember the closing line – “the only thing that could tear down the House of the Dragon was itself”.

Over the last five years, the UAE in particular has recognised that more needs to be done in terms of legacy planning, especially in relation to assets that are based in the jurisdiction. The introduction of foundations legislation as well as the relaxation of foreign ownership rules have not only contributed to the enhancement of the DIFC and ADGM as global finance centres but have also paved the way for a change in the wealth management landscape. Service providers can take advantage of the tools and put in place structures that are legally enforceable, meet regulatory requirements and filings and provides a greater level of certainty to the client that their wishes will be followed post their passing.       

But how can Trustees help? The first step is to really gain an understanding of the clients wishes and to recognise the family dynamics. Where possible, it is important to use tools that are readily available to the Trustee but that can be tailored in a bespoke fashion to the family. There is no “one size fits all” approach, and it is of vital importance that clients understand that what may work for one family may not work for their family. Such is the complexity of cross-border estates that a holistic approach must be at the heart of any discussion.

One of the stumbling blocks when Trustees meet with families is in relation to the fundamentals of establishing a Trust. The client is unlikely to fully understand what a Trust is or how it operates and certainly does not want to give up ownership or control of assets to a Trustee who is based on the other side of the world and whom they don’t know or even trust. Ownership and control of assets is a top priority for many clients who have worked their entire lives to build a successful empire. Herein lies a route to the House’s downfall – The head of household does not want to relinquish ownership or control over something they have spent their entire life building or have inherited and therefore decides not to engage in any meaningful succession planning. But what happens if there are no heirs or the heirs have shown little regard towards the future success of the family business? There is a saying that the first generation builds it, the second generation spends it and the third generation destroys it. By using the correct structures it is possible to help futureproof family wealth and effectively mitigate the majority of threats posed by not having a clear and concise succession plan.

At Fairway, we believe in building meaningful relationships and providing a value-add service. Being an owner managed business, we can understand the position and importance of our clients and can help safeguard the family legacy. Our aim is to ensure that the house does always win!

For more information on our specific Middle East Family Office services please get in contact.

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