Running a successful business is enormously rewarding, absorbing every minute of your time and every ounce of energy.
But what if something happened to you? Would your business continue to run smoothly, led by people that you trust? Would your wealth be accessible to your family and protected from excessive inheritance tax?
Planning for the future is essential if you want to make sure your business is in safe hands, your wealth protected and your family provided for.
So it’s alarming just how many business owners fail to put in place the documents and structures needed to ensure their personal wishes and business needs dovetail, protecting all that they have worked so hard to achieve.
When considering business continuity in this context it is important to be clear about the disposable value of your estate and business interests,
- the amount of inheritance tax your estate is exposed to,
- how your family would access the value of your business wealth when you pass away,
- whether surviving shareholders are protected,
- who would operate the business on a day-to-day basis,
- whether a family member of a shareholder would inherit shares leaving the business exposed to new influences,
- whether there is available cash to facilitate the purchase of your shareholding on death, and
- who would protect your estate and best interests if you were to lose mental capacity.
If you are unsure about the answers to any of these points, we would advise you to take some important immediate steps:
- Ensure you have an up-to-date, well-drafted will that deals with your business interest, saves inheritance tax and provides for your family.
- Check that your business’s governing documents, such as shareholder agreement and articles, are up-to-date and in line with the wishes of the current owners and board.
- Consider putting in place arrangements such as a cross option agreement to create clarity about what happens to each shareholder’s shares should they pass away.
- Put in place shareholder insurance cover to raise funds to facilitate a share buyback.
- Create a Lasting Power of Attorney specifying who you wish to appoint to manage your affairs should you be unable to do so yourself.
If you need advice on any of these steps or would like to arrange a free business health check, email Beswicks’ Wealth Protection Senior Associate firstname.lastname@example.org or call David on 01782 205000