Busy running your business, and focused on the needs of others?

You may be one of the many business owners/leaders we come across who are too busy to put their own personal and financial affairs in order. Failure to do so will probably cause complications in the future and may also result in you paying more inheritance tax (IHT).

Succession planning is key to the effectiveness and sustainability of any business, big or small. The first and essential step is to have a will in place. This ensures that the people you wish to benefit from your estate do so and that the people who you wish to administer your estate do so. Preparing a will also allows you to fully utilise the tax planning opportunities there are, such as business property relief (BPR).

Estates are subject to IHT of 40% on anything over the nil rate band and residence nil rate band (currently) of £325,000 and £100,000. In addition, BPR provides relief from IHT on the transfer on death of ‘relevant business property’ at either 100% or 50%; such property includes a business or a share in a business and shares in unlisted trading companies. Failing to prepare a will, meaning that your business and personal assets pass under the intestacy provisions, may mean that such relief is wasted.

The preparation of a will would also enable you to consider the use of a discretionary trust, whereby the legal title to your business assets would pass to chosen trustees, but who are to run the trust for the benefit of your chosen beneficiaries. Depending on your business structure, and the terms of the articles of association or partnership agreement, your trustees could then have a say in the running of your business affairs in the immediate aftermath of your death, perhaps for a limited period of time. This might be preferable to passing your business assets on to family members who might not be best placed at that time to receive them, depending on their age or circumstances. It might provide welcome flexibility at a time of uncertainty and need.

The simple step of preparing a will can ensure that the business you have worked so hard to build continues on after your death, in a way that you would wish, and continues to provide for your family members after your death.

If you would like to discuss this matter further, please do not hesitate to contact me for a free 15 minute chat over the phone on 01245 453840, or alternatively, you can email me at tim.ogle@birkettlong.co.uk.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.