If you run a family business you may well want to keep it in the family when you pass on. This can be a complex and tricky field to navigate so it’s important to seek professional advice to ensure everything is in order from a legal perspective.
It’s key to discuss succession planning in your business with your family and business partners right from the start. Open discussions will help avoid issues and emotional upsets further down the line when times are tricky. You should regularly review your business arrangements to ensure they are up to date. Shareholder agreements must be checked to assess if they are still fit for purpose as these will set out exit strategies for people leaving the business.
As a business owner you also need to consider what will happen in the event of ill health or if you are misfortunate enough to have an accident which has a profound effect on your health. Do you have a lasting power of attorney in place so matters can be conducted if you are not capable of carrying them out yourself? If not, please do get in touch and we can advise you on this, we offer 30 minutes free advice for new clients.
Many business owners want their businesses to flourish after they are gone and to continue for the benefit of their family but you need to consider who will inherit the company – does your partner have the skills required to take it on in your place? Are your children at an age or of the mindset where they could run the business?
You also need to consider how you split the business – a 50/50 split between two children would be equitable but would leave them at a stalemate if they could not agree on a business decision. If you leave the business to just one of them, what will the other receive to ensure a balance? You may require the company to be valued to help you make these decisions which can be tricky. An Accountant would be a good starting point for this valuation.
You also need to consider if there will there be sufficient cashflow to keep the business running whilst your estate is finalised when you pass away – this cash flow will ensure the business is in a strong position to continue once matters are finalised.
When you are reviewing the continuation of the family business you could consider appointing someone to run the business on your family’s behalf once you pass on. It may be worthwhile investigating if a Discretionary Trust should be put in place, however this could have tax implications so it is imperative to take professional legal advice before proceeding.
Flackwoods Solicitors can help you plan what to do with your family business in the event of your death. Contact us on 01403 738777 or email email@example.com to arrange an appointment.