While entrepreneurs are naturally – and rightly – preoccupied with running and growing their businesses, they need a step back to consider how to protect their business’s legacy.
Estate planning specialists Susan Maxey and Fiona McLaughlin at Womble Bond Dickinson share their tips for business owners, which could make an important difference to loved ones.
Reviewing the structure of the business
Many businesses qualify for 100 per cent business property relief from Inheritance Tax (IHT), meaning that the shares of a deceased shareholder can often pass to their chosen beneficiaries free of IHT. This relief is often taken for granted. However, if a business includes non-business assets or non-trading activities, this relief may not be available.
Under the intestacy rules, which apply if a person dies without making a will, only limited provision is made for a surviving spouse if there are also surviving children. Some business owners may also want to ensure that their spouse is provided for, but in a way which preserves their assets for the ultimate benefit of their children, which the intestacy provisions or a simple will cannot provide for.
A will drafted by a specialist lawyer can minimise the potential liability to IHT and provide flexibility.
Lasting Powers of Attorney
Difficulties can arise if a shareholder becomes unable to make business decisions or deal with their shares. Appointing a property and finance attorney in advance will help.
The alternative is an application to the Court of Protection to appoint a deputy, but this can take months and the deputy has to act under the direction of the court.
Planning for a business departure
Too frequently, clients exit a business without thorough consideration to the form that exit should take and may suddenly find themselves with cash on which IHT would be charged in full on their death. If the right planning is undertaken to reorganise their business interests pre-exit, it ensures that some or all of the proceeds are protected for their family.
Creating the right team
Whatever stage a business is at, having the right legal, tax and financial advisers to provide specialist support is vital. The private wealth team at Womble Bond Dickinson can put you in touch with the right people to make sure that you get the advice you need at every stage, including the firm's in-house corporate lawyers who can assist with any business reorganisation or review of governing documents.
For more information contact Susan Maxey or Fiona McLaughlin at Womble Bond Dickinson, call 0345 415 0000 or visit www.womblebonddickinson.com