Own a Business
Privacy
Please note, we have changed the names to ensure our clients' privacy.
Details
Michael is married with two children and owns a business with his friend Nick. Michael got in touch with us recently to ensure his Will and overall estate plan is drawn up to meet his wishes which were that when he dies, he would like his share of the business and all his other assets to go to his wife and then children.
At Pattison James Associates, we specialise in advising clients who own businesses to ensure that Business Property Relief (relief from Inheritance Tax) can be claimed on business assets to avoid an adverse tax situation after death. We also help clients to consider the reality of the ongoing situation. In the above case we put a robust plan in place to ensure that on Michael's death, his business partner Nick has the first opportunity to buy Michael's shares ensuring that Nick can continue to run the business without the involvement of Michael's wife. Michael's wife and children would then receive cash for Michael's shares and in such a way that this now non-Business-Property-Relief-qualifying asset (cash) does not suffer Inheritance Tax on the death of Michael's wife and later, his own children then grandhildren etc. Further, we ensured shareholder protection was in place to provide the appropriate funds on death to enable Nick's purchase of Michael's shares from his estate. Without this, the business would have to take out a significant loan to purchase Michael's shares after his time of death at a high interest rate and at a time the business' worth could well be deemed to have significantly devalued due to the death of a major shareholder - for most small to medium-sized businesses, this simply wouldn't be a viable option.
Getting this planning in place during life is essential to the longevity of the business on the death of a business owner as well as ensuring the family get the full financial benefit of the shareholding. Without it, there wouldn't be funds available to purchase Michael's shares from his estate meaning Nick and Michael's wife would be in business together. In this instance, Nick could quite easily create a new company, sign clients into contracts with the new company leaving Michael's wife a 50% shareholder in a business worth nothing which of course is not what Michael had envisaged.
Having put a robust estate planning solution in place for Michael, he then insisted that we do the same for his business partner Nick to ensure not only was Nick protected but also the continuity of the business, should Nick die. The best way to get started is to book your Will writing appointment online now and allow us to fully advise you on the most appropriate way to achieve your wishes.