The best solution for you and your business

The best solution for you and your business
January 10, 2017 Reiss Matthews

Setting up a business is often an exciting time as you look forward and plan for the future. You may have invested much in a new enterprise and are hopeful of success.   So although we do not like to think about it, do your plans consider what would happen in the unfortunate event of death.

On death, a shareholder’s shares will form part of their Estate.  If there is a Will, it will be dealt with in accordance with those terms.  If there is no Will, the shares are dealt with in accordance with the rules of ’intestacy’, which means your Estate will pass in accordance with a fixed set of legal rules.

For shares in a qualifying business, the shares may attract Business Property Relief (BPR) which is a relief for Inheritance Tax purposes and can mean that 100% of the value is disregarded for Inheritance Tax.  In order for shares in a business to qualify for BPR very specific criteria must be satisfied and therefore expert advice should be obtained in order to determine whether or not these criteria are met.

Careful planning is needed due to the above and simply leaving your shares to be dealt with as part of your Estate may not always be the best option for some or all of the following reasons:

-Your family may require cash instead of shares to pay for everyday living costs

-Shareholders may be forced to work with family members who know nothing about the business

-You may end up with too many people involved in the decision making;

-You may lose BPR, for example if the shares are left to a spouse and later sold by them, removing the BPR that was once attached

A shareholders agreement should be prepared in conjunction with a Will to ensure that things run smoothly after death.  The use of a Trust in your Will may also allow the shares to retain BPR and fall outside a couple’s estate for Inheritance Tax purposes.  Too often planning of this type is left until it is too late to implement matters.

At Enoch Evans LLP we can bring all this planning together seamlessly.  Our Corporate and Commercial Team are experts in drafting and advising on shareholder agreements and working alongside the Wills, Tax and Probate team will bring it all together to ensure the best solution for you and your business.

Call now to speak to one our specialists; James McFarlane in our Corporate and Commercial team or if you have any other queries regarding the Preparation of Wills or Estate Planning please contact Reiss Matthews ; Enoch Evans LLP  01922 720333

Or complete one of our online query forms: Link to enquiry form

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