The BBC's documentary series of six programmes 'Can't take it with you' highlighted the importance of making a Will. It revealed that a staggering 70% of people have never made a Will.
For families who have built up their businesses and want to pass it on to the next generation, whether during their lifetime or through a Will, succession planning is absolutely essential. Business owners need to give regard as to how they would like their business to continue and be managed whilst taking into consideration the interests of those children who work in the business and those who do not. Each and every business is different but here are some tips:
- Dig out any agreements such as Partnership Agreements, Shareholders' Agreements and Articles of Association. They can help to determine the value of your business.
- If you've got business partners you should discuss your plans for succession with them first. Have they made any plans themselves? How will their plans fit into yours?
- Discuss with family members. Which ones want to be involved in your business and which do not? Can they work together? Why not get them all together offsite and open proper discussions so that everyone can air their views, even if it might mean you have to change your plans - after all, they have to be workable plans. You have other decisions to make about whether the shares should be held outright by your children or held in a family trust, which would ensure that there is no dilution of ownership over the generations. Fairness is a practical issue but fraught with emotion.
- Where family members do not want to be involved in the business in a practical way, consider the alternatives. Check life insurance policies so that each business partner has the funds to buy the family out.
- If you haven't made a Will, now is the time to make one. This will ensure the success of your plans; otherwise your business might end up in the wrong hands.
- Make sure you effectively use all available tax reliefs, for example Business Property Relief (BPR).
- Choose your executors and trustees carefully - you'll want people who will ensure the smooth transition of your business from your estate to your beneficiaries. They need to be people you can trust to make decisions in the best interests of your family and your business.
- With the changing nature of the economy and business in general, you'll need to review your affairs at regular intervals.
- Finally make sure your papers are in order, up-to-date and keep them somewhere safe.
What should you do next?