What’s involved in succession planning for business owners?
Setting up a new business is an exciting venture with the prospect of making money and providing for your family, but something that is often forgotten is what should happen to that business on death? Presumptions are often made that another family member will continue running it or the business will simply wind up, but the options are not often discussed and estate and inheritance tax planning opportunities are lost.
Another important aspect of succession planning will be looking at whether your business will be subject to inheritance tax when you pass it on. If your business assets satisfy the relevant criteria, they could benefit from Business Property Relief (BPR) which is a relief from inheritance tax. BPR applies to qualifying business assets (which means business interests or assets in an active trading business) which have been owned by the deceased for a minimum of two years before death. Interests or assets in an investment business will not receive the relief. For example, if you were to purchase a portfolio of properties, place them in a company and rent them out, this would be an investment business and wouldn’t qualify for BPR.
It can sometimes be unclear whether the relief will apply as a business can consist of a mix of activities, some of which are investment and some of which are trading. Also any money held within a business which is not required for the running of the business will not benefit from the relief. However, by taking specialist advice on succession planning for your business it can help you identify which assets qualify and so you can plan for the future of your business.
How can SAS Daniels assist with business succession planning?
Our Wills & Wealth Planning team have a range of knowledge and experience when it comes to succession planning for businesses and can advise you on:
- Drafting a Will which is bespoke to your individual needs and the needs of your business;
- How to incorporate planning in to your Will to ensure your children benefit from any business assets and not just your spouse;
- Identify qualifying business assets in order maximise BPR.
By providing you with advice on succession planning for your business, we can make sure that your business and its assets are taken care of when you die. This leaves you able to continue to run the business, knowing that this aspect of your life is covered in your Will.
In conjunction with your Will, you should also make sure that any corporate documents are in place and up to date. For example, shareholders’ agreements and partnership agreements should be reviewed to make sure that succession is properly covered. Within SAS Daniels we have a dedicated Corporate team who can advise you on how to go about updating your documents.
For more information on drafting a Will or succession planning for your business, please contact our Wills & Wealth Planning team via our contact form, or call us on 0161 475 7676.