In the current circumstances, the question which has crossed many people’s minds is: “Where do we go from here…?” David White addresses how best to future proof a business’ strategic plan and ensure continuity by business succession planning.
For business owners in particular, this is an incredibly challenging time with unprecedented changes in consumer habits, emergency fiscal measures and employment practicalities. It goes without saying that appropriate legal advice should be taken to support businesses through this turbulent period.
BTO can cover all angles from corporate to employment law,
data protection and litigation. However, a business is not only made up of technical legalities; there are often family emotions and dynamics at the centre, which can just as easily affect a business. Therefore, it is important to consider the next steps in a business’ strategic plan and how best to future proof its success.
Business Succession Planning
- Legacy of Business Interests: Without a Will, your estate will be distributed to specific
beneficiaries in terms of statutory succession law on your death. From a business perspective, this may be, at best, inadequate and, at worst, catastrophic. It may be entirely at odds with both your own wishes and the needs of the business with shares passing to the wrong people. This may also fly in the face of the Articles of Association or any Shareholder’s Agreements which are in place. The passing of shares is a pivotal moment in a business. Therefore, a Will is vital for business succession planning to bequeath any business interests to the ‘right’ beneficiaries.
- Appointment of a suitable Executor/Trustee: As above, when someone dies without a Will, specific individuals must apply to the court to be appointed as your Executor and, again, this is most likely to be a family member. On the other hand, a Will allows an individual to provide clarity and certainty by appointing the appropriate person in their lifetime.
For example, you may prefer that someone representing your business interests is appointed as co-Executor. A Will is the only way to achieve this. - Trust provisions: From a tax perspective, it may be beneficial to hold business interests subject to trust provisions. There is no point in wasting time predicting the future, as it is no longer predictable. Instead, make your business agile by building in flexibility to manage your business interests. Trust provisions also allow your wishes to be met by your Trustees. Expert and bespoke legal advice is essential for these provisions.
Personal Succession Planning
- BPR eligibility: There are a number of measures which an individual can take to reduce their tax liability in any given circumstance. With business assets, it is always important to consider whether any Business Relief is available or whether any actions can be taken to enhance this relief. We can assist with this as part of an overall tax planning
assessment.
- Investment opportunities: With a little bit of luck, you will have also derived a certain amount of wealth from the business. It is important to consider whether any investment opportunities may exist which can increase this wealth, whilst maintaining an efficient tax-planning strategy. We can advise you on this and also have a number of Scottish based IFA contacts at your disposal to complement our service.
- Gifting and other tax-saving measures: Finally, any decent personal succession plan will consider gifts of assets to minimise your own Inheritance Tax liability and allow the next generation to flourish. We can assist in assessing both your current and potential future needs to identify any opportunities. This advice can be carried out in consultation with
the next generation’s involvement to ensure efficiency for all involved.
Would you like to read more on Business Succession Planning? Visit our section on Succession Planning & Family Businesses or contact us to discuss how we can help you with succession planning for your family business.
David is a Solicitor and Notary Public. He joined the firm as a Trainee Solicitor in September 2016 after graduating from Strathclyde University. He spent the majority of his traineeship within the Private Client department and has thus qualified into the department already having dealt with a wide variety of issues.
Read David's bio here.
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David Whitehttps://www.btopersonal.co.uk/author/david-white/
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David Whitehttps://www.btopersonal.co.uk/author/david-white/
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David Whitehttps://www.btopersonal.co.uk/author/david-white/
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David Whitehttps://www.btopersonal.co.uk/author/david-white/
