Succession Planning for Brokerages: What Trustees Should Know After a CEO Move

Facing a CEO change at a trust-owned brokerage? Immediate trustee priorities

Trustees and fiduciaries responsible for businesses face a high-stakes window when C‑suite leadership changes. If a trust owns or holds interests in a brokerage, the CEO move that followed Century 21 New Millennium’s recent leadership transition is a timely example: the founder stepped into a newly created chairman role while a seasoned external executive became CEO. That kind of shift—effective immediately—creates legal, governance, tax and operational decisions trustees cannot defer.

The bottom line first: What trustees must secure in the first 30 days

Prioritize continuity, protect trust value, and preserve optionality. The most important actions are not exotic legal maneuvers—they are practical steps that reduce risk and create breathing room for strategic choices:

• Confirm authority: Verify the trustee’s power to act under the trust instrument and any side agreements.
• Preserve liquidity: Ensure cash or credit lines are available for payroll, key-man insurance premiums, and short-term buyout mechanics.
• Stabilize leadership: Approve interim management, confirm the incoming CEO’s appointment or endorsement by the board, and document delegated powers.
• Communicate clearly: Issue a stakeholder communication plan that reassures agents, lenders, and regulators while preserving confidentiality where required.

Why this matters now (2026 context)

Industry consolidation and private capital activity accelerated through 2024–2025, and regulators and counterparties increasingly scrutinize governance for trust-owned businesses. Digital due diligence, ESG considerations, and AI-assisted HR practices are now part of standard reviews. Trustees who respond quickly—documenting fiduciary decision-making—reduce litigation and valuation discount risk.

Case study: Century 21 New Millennium — what happened and why trustees should care

In late 2025, Century 21 New Millennium (owned by NM Real Estate Services) announced Kim Harris Campbell as CEO; co-founder Todd Hetherington moved to chairman on a newly formed board with co-owner Mary Lynn Stone and an industry CEO, Tara Brown. For trustees who might own similar brokerages, this transition highlights key issues:

• Founder retention on the board: The founder’s move to chairman stabilized the business while enabling an external executive to lead operations.
• Board reconstitution: The firm created a new governance layer, changing how executive oversight and strategic direction were handled.
• Strategic partner involvement: Peerage Realty Partners’ historical support signaled external capital and strategic alignment—factors that affect minority exchange mechanics and transfer restrictions.

“I’ve been incredibly fortunate to build this company alongside exceptional agents and leaders... Serving as chairman allows me to stay actively involved and support Kim as she leads the company.” — Todd Hetherington

From a trustee standpoint, those moves illustrate strong continuity planning—but only when accompanied by careful documentation, conflict-management steps and clear transfer rules.

Practical checklist: Governance documents trustees must audit

Run a focused governance and contract audit. Below is an actionable checklist trustees should complete immediately and refresh annually:

1. Trust instrument review: Confirm powers to hold, vote, sell, or restructure the brokerage interest; note investment and disposition standards.
2. Operating/Shareholder agreements: Check transfer restrictions, preemptive rights, drag/tag provisions, and valuation triggers.
3. Buy-sell and redemption clauses: Identify triggers (death, retirement, change of control) and funding mechanics (installments, cross-purchase, insurance).
4. Board charters and bylaws: Confirm appointment rights, removal procedures, and quorum/vote thresholds—especially for trust-owned seats.
5. Employment and CEO contract: Review term, severance, change-in-control clauses, non-competes (enforceability differs by state) and IP ownership.
6. Loan and creditor covenants: Examine covenants that could accelerate on leadership or ownership changes.
7. Insurance policies: Check D&O, key-person life, and business interruption coverage and whether premiums are current.
8. Regulatory licenses: Confirm brokerage licenses and compliance obligations that may be impacted by leadership changes.

Fiduciary oversight: how trustees balance deference and duty

Trustees are not day-to-day managers. Yet trustees owe duties of care and loyalty to beneficiaries. That balance becomes acute when a CEO departs or is replaced.

Practical standards trustees should apply

• Informed decision-making: Gather independent valuations, management reports, and third-party assessments before consenting to major actions.
• Reasonable reliance: Document reliance on experts (valuers, counsel, forensic accountants) consistent with the trust instrument and state trust law.
• Conflict management: Where founders retain board roles, require recusal policies and written disclosures for related-party transactions.
• Document the process: Maintain contemporaneous minutes and written resolutions showing why decisions were made and which alternatives were considered. Consider secure, auditable storage and governance for those records consistent with evolving records governance.

Transfer restrictions and liquidity: planning for valuation events

Trust-owned business interests often face transfer restrictions protecting continuity and buyer consent. Trustees must map these restrictions against liquidity needs and tax timing.

Key actions

• Map restriction triggers: Identify events (CEO departure, sale, capital raise) that allow other owners to buy or impose restrictions.
• Plan valuations: Pre-authorize valuation providers or formulae in governance documents to avoid disputes at the time of transfer.
• Secure liquidity: Maintain lines of credit or earmark reserves to fund buyouts, taxes, or compensation obligations tied to leadership changes.
• Consider escrow: For large transactions, structure escrows to preserve trust value pending indemnity or performance milestones.

Board composition and continuity planning

Board structure determines strategic control. When a trust is a significant holder, trustees should negotiate protective provisions that balance influence with delegation.

Best-practice governance provisions

• Observer rights: If direct board seats create conflicts, secure observer rights with written access to materials.
• Staggered terms: Reduce disruption by staggering board terms and setting minimum notice for leadership nominations.
• Independent committees: Prioritize an independent audit and compensation committee to review CEO performance and pay while reducing perceived conflicts.
• Emergency governance: Establish acting CEO selection processes and succession ladders in writing to avoid ad hoc decisions.

Employment contracts and executive incentives

Executives’ employment agreements can create friction during a trustee-led review or sale. Trustees should scrutinize these contracts for hidden costs or change-in-control accelerations.

Review checklist for employment and incentive plans

• Severance and change-in-control payments
• Equity vesting acceleration triggers
• Non-compete and non-solicit enforceability
• IP assignment and confidentiality terms
• Clawback and malus provisions tied to restatement or misconduct

Stakeholder communication: what, when, and how to speak up

Communication must preserve confidentiality yet prevent panic. Trustees should coordinate with the board and management to craft a staggered communications plan:

1. Immediate notice: Internal staff, regulatory bodies, and major creditors—facts only, no speculation.
2. Public statement: A short, confidence-building message that signals continuity and governance oversight.
3. Beneficiary briefing: Explain the trustee’s fiduciary role, immediate steps taken, and expected review milestones.
4. Agent/affiliate outreach: For brokerages, agents are the revenue engine—assure them on commission processing, leadership accessibility and strategic direction.

Advanced strategies trustees should know in 2026

As of 2026, advanced tools and market expectations shape trustee conduct:

• Digital governance platforms: Cloud-based board portals and secure document vaults and secret-rotation/PKI best practices create auditable trails and speed decision-making in leadership transitions.
• AI due diligence: Machine-assisted contract review and anomaly detection for AI systems help spot hidden transfer triggers or unusual indemnities.
• ESG and reputational scoring: Buyers and lenders increasingly price governance and reputational metrics; trustees should incorporate these into valuation assumptions — tie this into sustainability and reputational frameworks like sustainability scoring.
• Cyber and data privacy vetting: Remote brokerage models mean trustees must review cybersecurity hygiene as part of operational risk assessments — consider privacy-first design guidance (privacy-first personalization and on-device models).

Audit triggers and when to bring in outside experts

Not every CEO change requires a forensic audit. But trustees should look for red flags that justify deeper review:

• Unexplained related-party transactions concurrent with leadership changes
• Significant deviations in compensation or bonuses in the transition period
• Lapsed insurance policies or covenant breaches
• Valuation gaps between internal models and independent appraisals

When red flags exist, commission an independent financial and operational audit. Use a short, scoped engagement letter to preserve budget and focus on the most damaging risks first. Consider using modern tooling for reconstructing fragmented digital records if minutes or documents are incomplete.

Practical trustee action plan: immediate, 30-, and 90-day milestones

Immediate (days 0–7)

• Confirm trust authority and document chain of title.
• Authorize essential payments (payroll, insurance).
• Notify internal stakeholders and key counterparties.

30-day (days 8–30)

• Complete governance & contract audit (use the checklist above).
• Engage valuation expert, if sale or buyout is likely.
• Secure interim management or confirm CEO appointment terms.
• Execute a communications plan to beneficiaries and agents.

90-day and ongoing

• Finalize any buy-sell mechanics or liquidity arrangements.
• Review and update trust investment policy with lessons learned.
• Institutionalize board committee structures and independent oversight.
• Schedule annual governance audits and cybersecurity assessments.

Sample governance clauses trustees should consider

The following clause concepts are practical starting points for counsel to tailor:

• Observer Right Clause: "The Trustee shall have the right to appoint a non-voting observer to the Board with access to all materials provided to directors."
• Independent Valuation Mechanism: "For purposes of any transfer, an independent valuation by an appraiser agreed between the parties (or selected under an established roster) shall determine fair market value."
• Succession Escrow: "In the event of CEO departure, a portion of executive consideration will be held in escrow for 12 months to secure transition obligations."

Always involve specialized counsel and tax advisors to adapt clauses to state law and the trust’s unique terms.

Common pitfalls and how trustees avoid them

• Pitfall: Waiting to document decisions until after the fact. Fix: Record contemporaneous minutes and expert reliance.
• Pitfall: Ignoring employee morale and agent retention. Fix: Communicate early, preserve commissions and incentives, and monitor retention metrics.
• Pitfall: Underfunded buyout obligations. Fix: Pre-fund with insurance or lines of credit linked to the trust.
• Pitfall: Overlooking contingent liabilities in employment contracts. Fix: Audit contracts for hidden accelerations and indemnities.

When to consider divestment or restructuring

Not all trustee-owned brokerage positions are long-term holds. Consider divestment or restructuring when:

• Governance conflict is chronic and impairs value.
• Capital calls or operational demands exceed the trust’s permissible investment profile.
• Market consolidation creates a sale opportunity that exceeds projected long-term returns.

Structuring a sale often requires staged transactions, earnouts, and tax-aware timing to maximize proceeds and minimize fiduciary risk.

Final checklist for trustees overseeing a brokerage after a CEO move

• Confirm authority and document chain of title.
• Complete governance and contract audit.
• Secure liquidity and insurance coverages.
• Engage valuation and legal experts where transfer mechanics are triggered.
• Document all decisions with contemporaneous minutes and expert attachments.
• Implement a clear communications plan for beneficiaries, agents, and regulators.
• Adopt digital governance tools and annual audit schedules.

Conclusion: Trustees as stewards of continuity and value

CEO transitions like the one at Century 21 New Millennium underline that governance choices—board composition, founder roles, and transfer mechanics—drive both risk and opportunity for trust-owned brokerages. Trustees must combine disciplined governance audits, clear communication, and liquidity planning with modern tools (digital board portals, secret-rotation and PKI trends and zero-trust controls for AI systems) to protect and enhance trust value in 2026.

Takeaway: Treat leadership changes as strategic inflection points: act fast to stabilize, audit to understand obligations, and document to defend decisions.

Need a trustee action kit for a brokerage transition?

We’ve produced customizable checklists, governance clause templates, and a 90-day action plan trustees can deploy immediately. Contact our team to receive the Trustee Brokerage Transition Kit and schedule a 30‑minute consultation to map your next steps.

Not legal advice. Trustees should consult counsel and tax advisors for state-specific guidance and bespoke drafting.

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