This is a dreadful waste not only to the business community but also to the deceased’s family, whose future wealth could be substantially enhanced if the business were able to continue.
A succession plan for your business should be considered long before you near retirement age. In this way you can ensure you have considered all of the issues relevant to you and your family and you may even have overseen the successful transition from one generation to the next long before your own death. Even if you are still involved in the business at the time of your death, a carefully considered and appropriately drafted Will can remove much of the worry and anguish from those left behind.
Some points to consider :-
- What are your family’s expectations? Do your children have any intention of following in your footsteps?
- If they do want to be involved, are their skills up to the job? How would you ensure that they were, or had the required support in place, by the time the transition was necessary?
- If the family want to keep the business going but don’t have the skills or inclination to acquire them, is it feasible for them to put in a management team but retain ownership? Would they know how to do that/where to start?
- Do you want to protect any of your existing employees or even give them a stake in the business?
- If only some of your family would want to be involved in the business, yet you want your children to benefit equally from your estate, how do you achieve that equality?
- If you want to bow out of the business during your lifetime, will you and your spouse have sufficient resources on which to survive comfortably?
- How will your spouse be catered for after your death?
Careful consideration of these issues can give a starting point for planning the succession to your business. It is advisable to discuss the issues with your family so that there are no surprises. Professional advice is imperative so that you can fully appreciate the implications of any proposals. This is best done by a series of face-to-face meetings with a trusted adviser to ensure you are happy with the outcome. The eventual succession plan can be achieved by a combination of lifetime planning and suitable provisions in your Will.
Business property relief
Depending on the type of business you run and the assets of the business, any bequest of a business interest or business property may attract Inheritance Tax relief at either 100% or 50% of its value. This relief is not always available, however, and each case must be considered separately to see if it is likely to apply.
