> ## Content Index > Fetch the complete content index at: https://www.incomestead.com/llms.txt > Use this file to discover other available public pages before exploring further. # Your Governance System Lives in Your Head. That's a Problem for the People You Love. - URL: https://www.incomestead.com/blog/investment-succession-plan/ - Published: 2026-08-05T07:41:42.000Z - Updated: 2026-08-16T16:26:20.000Z - Description: Your statement shows what you own. It cannot show the rule you were about to apply — or whether this was the week you had decided to act. - Author: Stefano Starkel - Tags: Family Bank, #stage-2 An investment succession plan is the written record that lets someone else run your portfolio the way you run it — not who inherits it, but who can operate it next Friday. Mine did not exist for four years. My broker statement was immaculate: every position, every price, a margin loan of **$770,400** against **$2,140,000** of securities. Anyone could read it. Nobody could act on it, because the number that mattered — **36.00%** — appears nowhere on the statement, and the rule that turns 36.00% into an instruction lived in one place. My head. TL;DR A weekly governance reading needs **five** inputs. Your broker statement supplies **two**. The other **three** — which denominator you use, where your zone boundaries sit, and what last week's reading was — live in your head, and the last of those decays week by week unless somebody writes it down. An investment succession plan is the one page that does. On this page - [What is an investment succession plan?](#what-is-an-investment-succession-plan) - [Why can't someone just read the statement?](#why-cant-someone-just-read-the-statement) - [What does one weekly reading actually require?](#what-does-one-weekly-reading-actually-require) - [Which field can you probably not fill?](#which-field-can-you-probably-not-fill) - [The Substitution Test](#the-substitution-test) - [Frequently asked questions](#frequently-asked-questions) ## What is an investment succession plan? It is the operational half of the handover, and it is the half almost nobody writes. The legal half — who the account passes to, under what instrument, with what tax consequence — is a question for your attorney and your accountant, and nothing on this page touches it. I am not qualified to and I am not going to. The operational half is a different question, and it is entirely mine to answer: *if I am not at the desk next Friday, can the person sitting there run one week of this book correctly?* Not liquidate it. Not reallocate it. Just do the one recurring thing I do — read the book, name the zone, and either act or wait. I assumed for years that the answer was obviously yes, because the account is legible. Every position is listed. Every price is current. The loan balance is right there. What I had confused was **legibility with operability**. A statement tells you what the book *is*. It is silent on what you were about to *do*, and it is silent for a reason that turns out to be structural rather than clerical. > A statement is a photograph of the book. Governance is a verb performed on it. Nobody has ever inherited a verb. ## Why can't someone just read the statement? Take the book above. **$2,140,000** of securities, a **$770,400** margin loan. Anyone competent with a calculator gets to **36.00%** — that is margin utilization, the loan divided by the gross securities position value, and on [the zone system I run the book by](https://www.incomestead.com/blog/using-margin-safely/) it puts this Friday in **Freeze**. So far so good. A successor could get this far. Here is where they stop. My rule is that a breach has to appear in *two consecutive weekly readings* before it drives an action — with one exception, the Forced zone, which is acted on in the week it is first read. One bad Friday is noise; two is a condition. That rule is the whole reason the system does not thrash, and it is also the reason a single statement cannot produce an instruction, because the instruction depends on a reading that is not on it. Which means the boundaries have to be on the page, so here they are, with the convention that decides the edges: **Clear below 30%**, **Harvest from 30% up to but not including 35%**, **Freeze from 35% up to but not including 40%**, **Forced at 40% and above**. Lower bound inclusive, upper bound exclusive, every time. These are my names and my lines, not industry standard — which is exactly why a successor cannot infer them. Consider the two most ordinary things that could have been true last Friday. | Last Friday | Securities | Reading | Zone | This week's instruction | | ----------- | ---------- | ------- | ------- | ------------------------------------------------ | | Case A | $2,180,000 | 35.34% | Freeze | **Second consecutive Freeze — act now.** | | Case B | $2,205,000 | 34.94% | Harvest | **First Freeze — wait, read again next Friday.** | Identical statement. Identical **36.00%**. Opposite instructions. And the thing that separates Case A from Case B is $25,000 — **1.15%** of Case A's book — in what the collateral was worth seven days ago. Neither week is dramatic: Case A implies the book slipped 1.83% over seven days, Case B that it slipped 2.95%. Both are ordinary weeks. One of them means act; the other means wait. This is the part I had never articulated to myself: **governance is path-dependent, and paths are not stored in statements.** Your successor does not merely lack your judgment. They lack a fact. Be precise about how badly: if fields one to four are written down and your broker's historical statements happen to fall on your reading day, last Friday's number can be rebuilt. If your statement cadence does not match your reading cadence, or you exercised any judgment you did not log, it cannot. Mine is monthly. My readings are weekly. Three Fridays in four are simply gone. ## What does one weekly reading actually require? I sat down and counted. Not the whole system — *one reading*, the smallest complete unit of governance I perform. It needs five inputs, and only two of them are written down anywhere outside my own recollection. The substitution inventory · one weekly reading **1 · Positions and market values** — on the statement **2 · The margin loan balance** — on the statement **3 · Which denominator the reading uses** — in your head **4 · Where the zone boundaries sit** — in your head **5 · Last Friday's reading and zone** — in your head, and rarely reconstructable Five inputs. Two documented. Three carried by one person — and the fifth is the one that decays, because it is a reading taken on a particular day rather than a fact the account still holds. Input three sounds pedantic until you try it. "Loan divided by what?" has more than one defensible answer, and the answers are far apart. I use gross securities position value with no cash term at all, because in a single-currency book with no idle balance the loan *is* the negative settled cash, so there is nothing to add back. Mine is that book. A multi-currency account holding a positive balance in one currency while borrowing in another is not, and the choice has to be recorded rather than assumed. Someone else, holding the same statement and equal good faith, will reasonably reach for a different denominator and get a different number, and the number is what selects the zone. [What one book looks like under three different formulas](https://www.incomestead.com/blog/portfolio-tracking-spreadsheet-vs-software/) is a whole problem of its own, and I have written it up separately. Input four sounds even more pedantic. It is not. Boundaries need an inclusivity convention, or a reading that lands exactly on one belongs to two zones at once and the instruction is undefined at precisely the moment it matters most. ## Which field can you probably not fill? I want to name the awkward one directly, because a checklist you can complete effortlessly is a checklist that was not testing anything. Fields one through four are a writing exercise. Unpleasant, but nothing stops you finishing them this afternoon. Field five is different: it asks for *last week's reading*, and if you have not been keeping weekly snapshots, that reading does not exist. Not misplaced — never taken. You cannot write it down now. Most people reading this do not keep weekly snapshots. I did not for years. So the honest version of the Substitution Test is that four fields close a real gap immediately and the fifth converts from a gap into a *habit you have to start* — and it takes two Fridays before it produces its first usable answer, because that is what a two-reading rule means. I should be straight about my interest here: keeping that history is exactly what the software I am building does, and it is fair to read the previous paragraph as pointing at my own product. It also happens to be true, and a pen and a notebook solve it just as completely. What matters is that the fifth field exists at all, not who fills it. If you take one thing from this piece and it is a recurring Friday calendar entry with two numbers written under it, that is the whole win. > The gap is not credentials — you should not be sharing those, and they would not help. It is that a person holding every password you own would still be reading week one of a two-week rule. ## The Substitution Test Run this on your own book. Give it an hour, and expect not to finish field five today — that is the test working, not failing. Write down, on one page, in the order below: **(1)** the exact formula you use for your margin reading, including the denominator, spelled out in words rather than named; **(2)** your zone boundaries, each with its inclusivity convention stated — which zone owns the number that lands exactly on the line; **(3)** the persistence rule, if you have one, and whether any zone is exempt from it; **(4)** what the instruction actually *is* in each zone, written as something a person could execute without asking you a follow-up question; and **(5)** last Friday's reading and zone. One precondition before any of this is worth writing: **the page grants nobody the right to act.** Whoever you hand it to needs actual authority over the account, and the instrument that provides it is different for incapacity than for death. That is a question for your attorney, and it is the first call to make — an instruction sheet in the hands of someone with no standing at the broker is a document that watches the drift rather than stopping it. Then do the part that makes it a test rather than an inventory. Hand the page to someone who is not you, alongside your most recent statement, and ask them for one thing: *what would you do this week?* Do not help. If they come back with a question, that question names a missing field, and the field is the finding. Three failures are common enough that I will predict them. They will ask which numbers to divide, because the formula was named rather than spelled out. They will ask what "reduce" means in practice, because the instruction was a verb without a quantity. And they will ask whether this has been going on for a while — which is field five arriving under its own steam, from someone who has never read a word about persistence rules and can nonetheless feel that one photograph is not enough. There is a second reason this matters, and it is not about your absence at all. The same page that makes you substitutable makes you *consistent*. A rule you have written down is a rule you cannot quietly soften on a Friday when softening it would be convenient. That is closer to why I finally wrote mine than any thought about succession, and if you want the fuller argument for putting the process on paper before you need it, [the difference between having a strategy and having a process](https://www.incomestead.com/blog/personal-investment-policy-statement/) is where I have made it at length. ## What happens if nobody can run it? Nothing, for a while. Then the part that is genuinely urgent, and it is worth being blunt because this is a leveraged book and the downside is real rather than rhetorical. A **10.00%** fall in the collateral takes this book from **36.00%** to exactly 40.00% — which is Forced. Note that it lands precisely on the line, and that the line only has an answer because the convention was written down. That is the whole argument of this piece arriving in a single number. **But be clear about what Forced is, because this is where a leveraged reader gets misled.** Forced is *my* trigger, not my broker's. It sits far inside the broker's. On this book, FINRA's minimum maintenance equity of 25% is not reached until the collateral falls **52.00%**; even a stricter 35% house requirement needs **44.62%**. My Forced line fires after a 10% fall — more than five times earlier than the regulatory floor. The zone exists precisely so that the broker's threshold is never the one that governs. What makes absence dangerous, then, is not that liquidation is imminent. It is that the whole margin of safety between my line and the broker's is *made of weekly action* — and if nobody is acting, the book drifts across my line, keeps drifting, and eventually the only remaining decision-maker is the counterparty. FINRA is unambiguous about how that goes: *"A firm isn't required to notify you if your account equity drops below the minimum maintenance equity,"* and *"Firms don't have to let you choose which securities or assets are sold to meet a margin call."* Worse, *"Firms don't have to issue a margin call before selling securities in your margin account to meet a margin call and may sell enough securities to completely pay off your margin loan, not just meet the margin call"* ([FINRA, "Know What Triggers a Margin Call", 4 June 2026, accessed 5 August 2026](https://www.finra.org/investors/insights/margin-calls?ref=incomestead.com)). The firm may also raise its house requirement at any time without advance written notice — which moves the floor toward you while you are not watching. > The distance between my line and the broker’s is not a cushion. It is a job, and it is performed weekly by one person. The costs that arrive before any of that are duller and far more likely: interest accrues on the loan every day nobody is reading, at a rate that can move; and leverage magnifies an ordinary drawdown in both directions. A book left unattended does not usually blow up. It bleeds, and then one day it is somebody else's decision. There is a second cost that is invisible from the statement. A book sitting in Freeze is already suppressing its own Governance Score — the four-component read on how well the book is being run, whose margin component is gated by the zone, and which a Forced book caps at 34, the band named *Exposed / At the Edge*. A successor cannot see that number either, because it too is computed rather than printed. > An unwritten system does not fail by making the wrong decision. It fails by leaving the decision to the counterparty. So the failure mode of an unwritten system is not that your family makes a poor decision. It is that the *broker* makes the decision, on its own schedule, choosing its own positions, while the people who love you are still trying to work out which number on the statement they were supposed to be watching. The one thing a written page buys is that somebody can act before the counterparty does. None of this is an argument for running leverage. It is an argument that if you already do, the operating instructions cannot live in exactly one head. That is the **single-point-of-failure** problem in its most literal form — and [the case that governance is the layer above strategy](https://www.incomestead.com/blog/portfolio-governance/) is where I make the general version of it. The borrowing side of that trade — [who actually approves your loan, and what it costs you that a policy loan does not](https://www.incomestead.com/blog/borrow-against-stocks-without-selling/) — is the piece this one sits underneath. Do this next If field five was the one you could not fill, the fix is to start taking the reading — this Friday, then the next. Write the two numbers in a notebook if that is what you have. If you would rather the history kept itself, the weekly governance report I am building is the thing that does it — the founding cohort is where it opens first, with the weekly reading kept for you. [Join the founding cohort →](https://www.incomestead.com/#capture) ## Frequently asked questions ### Is an investment succession plan the same as a will? No, and they solve different problems. A will governs who receives the assets; an investment succession plan governs how the account is *operated* in the meantime — the formula, the thresholds, the instruction in each state, and last week's reading. The legal transfer is a question for your attorney and your accountant. The two halves are also not substitutes: a page of instructions is useless to someone with no authority to use it, and the documents that grant that authority differ depending on whether you are absent or gone. Ask your attorney which ones your situation needs — that part is not mine to answer. ### What is margin utilization, and why isn't it on my statement? Margin utilization is your margin loan divided by the gross value of the securities it is secured against — in the example above, $770,400 against $2,140,000, which is 36.00%. My broker does not print it, and there is no single agreed denominator to print: Saxo publishes a ratio under the same name computed as maintenance margin *reserved* against collateral, which is a different number entirely. That ambiguity is exactly why the formula has to be written out in words in a succession plan rather than named. ### What is the two-week persistence rule? It is the rule that a breach must show up in two consecutive weekly readings before it drives an action, so that one noisy Friday does not trigger a trade. It is also what makes governance path-dependent: the same reading means "act" or "wait" depending on what last week said. The one exception in my own system is the Forced zone, which is acted on in the week it is first read. ### How do I record last Friday's reading if I have never kept one? You cannot backfill it, so start it. Take the reading this Friday and write down two things: the percentage and the zone it falls in. Do the same next Friday. From that second reading onward you have what a two-reading rule needs, and your successor has a document that answers the only question a statement cannot. A notebook is sufficient; the constraint is the cadence, not the tool. ### I don't use margin. Does any of this apply? The urgency drops sharply, because there is no counterparty who can act without asking you. The structure does not. An unleveraged book still has a rebalancing rule, tolerance bands and a cadence, and those live in a head just as readily. Fields one through four of the Substitution Test apply unchanged; only the consequence of failing them is slower. This is education, not personalized advice. I run a leveraged, income-oriented book myself and write from that experience; I am not a licensed adviser, attorney or accountant. Nothing here is legal, tax or estate advice — for the transfer of assets, speak to your own attorney and CPA. Margin borrowing carries real risk of loss beyond your deposit, and a firm may liquidate positions of its choosing without notifying you first. Incomestead recommends. You decide.