PROMOTION Safeguarding your business and your family For business owners it pays to have your affairs in order. hen you are your own boss, you're busy building your empire, but what would happen to the business if you or your business partner had an accident or became seriously accountant and/or solicitor, who would be able to keep the business going or arrange for it to be sold. From an inheritance tax (IHT) point of view, shares in a private trading business onwned for more What would happen to your business on the death of you or your business partner? Ashare in a business forms part of an individual's estate and will pass under the terms of a Will. However, ill There are documents and as the surviving bausiness partner than two years will qualify Sor business reliefwhich means that no HTis payable on them. When the shares are purchased by the surviving sharcholder, the business reliefends as it does not apply to the proceeds of sale. Iftheshares are gifted to the spouse in the Will and then purchased by the surviving shareholder, the spouse would then have the proceeds of sale (rather than the shares) which would form part procedures you can put in place to keep everything running smoothly, maintaining continuity and security for your family that may not be the best scenario the family of your deceased business partner may have had nothing to do with the business peeviously, but now owns half the shares and is entitled to have a say in the running of the business and decision making The starting point is to review or enter into a shareholder's agreement The first thing to consider is to make a Lasting Power of Attorney (LPA) for financial affairs. This allows you to appoint an attorney to make decisions on your behalf in the event thas you are unable to do so yourself. You could appoint a This would set out the basic rules for the running of the business. In the event of serious illness/injury or death, the agreement would give each shareholder the first option to buy out the other's shares in the family member to be responsible for your personal affairs and appoint someone different to deal with your business affairs, perhaps someone who is better placed to make the right decisions about running your business oftheir estate and be liable to lHT on their death. However, if the shares were given to a discretionary trust for the family, those shares would not business. The shareholders would form part of the estate of any of the beneficiaries and would not be liable to lHT on their death, also take out key man life insurance. written in favour of the other and paid for by the company, to provide a lump sum in the event of death or illness, which would be used to fund Ifyou have not made an LPA, the only way someone can manage your affairs on your behalf is for them to If you would like further information on how apply to the Court of Protection to the share purchase. to sadeguard your business and your family be appointed as your Deputy This is a costly process which can take months to complete during which time your business and potential finances will effectively be put on hold. The next step is to make sure then please contact Jane Burbidge, Partner on 01772 220022 or emal you have a valid, up to date, tax effective Will. For a business owner jane burbidge@torbessoloitors.co.uk it is important to make sure that Together forbes you appoint the right people as Executors. Consider appointing your we are forbessolicitors Ofices in Accrington, Blackbun, Central Lancashire, Chorley, Leeds, Manchester and Preston www.forbessolicitors.co.uk PROMOTION Safeguarding your business and your family For business owners it pays to have your affairs in order. hen you are your own boss, you're busy building your empire, but what would happen to the business if you or your business partner had an accident or became seriously accountant and/or solicitor, who would be able to keep the business going or arrange for it to be sold. From an inheritance tax (IHT) point of view, shares in a private trading business onwned for more What would happen to your business on the death of you or your business partner? Ashare in a business forms part of an individual's estate and will pass under the terms of a Will. However, ill There are documents and as the surviving bausiness partner than two years will qualify Sor business reliefwhich means that no HTis payable on them. When the shares are purchased by the surviving sharcholder, the business reliefends as it does not apply to the proceeds of sale. Iftheshares are gifted to the spouse in the Will and then purchased by the surviving shareholder, the spouse would then have the proceeds of sale (rather than the shares) which would form part procedures you can put in place to keep everything running smoothly, maintaining continuity and security for your family that may not be the best scenario the family of your deceased business partner may have had nothing to do with the business peeviously, but now owns half the shares and is entitled to have a say in the running of the business and decision making The starting point is to review or enter into a shareholder's agreement The first thing to consider is to make a Lasting Power of Attorney (LPA) for financial affairs. This allows you to appoint an attorney to make decisions on your behalf in the event thas you are unable to do so yourself. You could appoint a This would set out the basic rules for the running of the business. In the event of serious illness/injury or death, the agreement would give each shareholder the first option to buy out the other's shares in the family member to be responsible for your personal affairs and appoint someone different to deal with your business affairs, perhaps someone who is better placed to make the right decisions about running your business oftheir estate and be liable to lHT on their death. However, if the shares were given to a discretionary trust for the family, those shares would not business. The shareholders would form part of the estate of any of the beneficiaries and would not be liable to lHT on their death, also take out key man life insurance. written in favour of the other and paid for by the company, to provide a lump sum in the event of death or illness, which would be used to fund Ifyou have not made an LPA, the only way someone can manage your affairs on your behalf is for them to If you would like further information on how apply to the Court of Protection to the share purchase. to sadeguard your business and your family be appointed as your Deputy This is a costly process which can take months to complete during which time your business and potential finances will effectively be put on hold. The next step is to make sure then please contact Jane Burbidge, Partner on 01772 220022 or emal you have a valid, up to date, tax effective Will. For a business owner jane burbidge@torbessoloitors.co.uk it is important to make sure that Together forbes you appoint the right people as Executors. Consider appointing your we are forbessolicitors Ofices in Accrington, Blackbun, Central Lancashire, Chorley, Leeds, Manchester and Preston www.forbessolicitors.co.uk