We understand that running a business can be very time consuming, but it is vital that you take the time to understand the importance of succession planning as it affects one’s business. The long-term survival of a business and the preservation of wealth is reliant upon strategic succession planning. A solid plan can drive growth, reduce taxes, and establish plans for your retirement.
Wills
A will ensures that your wishes are carried out once you have died. It can be easy to put it off, but the process is not as complicated as you may think, and we can assist you throughout.
The benefits of making a will are:
- To provide for your family and friends– making a will ensures that your assets are left to those loved ones that you specifically wish to benefit. The only way to include friends as beneficiaries of your estate is to make a will.
- Make a gift to charity– Making a cash gift to charity is not only inheritance tax exempt but is an effective means of providing for charities that are close to your heart. You can find out more in our article on Donating to a charity in your will.
- Reduce tax liabilities– A will can be structured in such a way that makes use of various tax exemptions. A matter of some importance in deciding what to do with your business when you die is the question of inheritance tax (IHT). Businesses or business property may qualify for 100% or 50% relief from IHT. However, not all businesses will qualify for this. When preparing your will, we will deal with all IHT implications for your estate in relation to the business or businesses owned by you.
- Prevent stress & worry– Where a will is made by a deceased person that sets out his or her wishes, such as funeral arrangements, this takes the stress away from family members that are left behind at a difficult time. It also prevents worry about what may happen to your assets and the distribution of the same.
When making a will you will need to consider who will carry out your wishes. Those people are called your Executors and become Trustees of your estate if any part of it is to be held in trust for any period of time. One must implicitly trust those that are appointed to act in this capacity.
Aside the family home, your business may well be your most valuable asset either in terms of its actual cash value or its importance as an income-earning asset.
As such, it is necessary to establish whether your business has procedures in place for continuation after your death. We can assist you with these matters when making your will to ensure that your business passes in accordance with your wishes to your beneficiaries. For example, we will ensure that a partnership agreement provides for the continuation of the partnership in the event of the death of a partner and, if applicable, contain an option for the surviving partner(s) to purchase a deceased partner’s interest in the partnership, document the basis for the valuation of your interest in the business upon death etc.
We can advise on structuring your will fairly, which is most pertinent in cases involving owners of small family companies where some children may or may not have an interest in carrying on with the business after the death of the owner.
We strongly recommend reviewing your will at least every 3-5 years to ensure that your wishes remain the same.
Lasting Powers of Attorney
There may come a point in the future when you are unable to manage your own affairs. This may occur at any stage in life and may be brought on by physical illness, mental illness or simply old age. To avoid uncertainty and to ensure that your affairs are in order, you should consider making a Lasting Power of Attorney (LPA).
There are two types of LPA:
- A Property & Financial LPA allows you to appoint one or more people (your attorneys) to manage your finances and property. This will enable your attorneys to deal with day-to-day correspondence, obtain money for your use, collect your benefits, pay your bills and sell or rent your house. You can appoint your attorneys to look after matters whilst you still have capacity.
You may well need a separate Property & Financial LPA dealing specifically with your business.
- A Health & Welfare LPA allows your attorneys to make decisions regarding your personal health and welfare. This could include making decisions about your day-to-day care, medical treatment and whether you should go into residential care. It can also give attorneys the right to accept or decline life-sustaining treatment.
We would advise you to choose people who you implicitly trust as your attorneys. The most common choices as attorneys tend to be one’s spouse, civil partner or partner, a family member, a close friend, a professional, such as a solicitor.
You can appoint one person to act on your behalf, name more than one person as attorney and specify different areas that each can make decisions about. You may also direct that decisions be made jointly or jointly and severally by both attorneys.
If you do not have an LPA and you lose mental capacity, many problems can arise. If this situation occurs it may be necessary to make an application for a Deputyship Order via the Court of Protection to enable someone to act on your behalf and administer your affairs which is very expensive, stressful and time-consuming.
