Leave a legacy that benefits your business and your family

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Inheritance is a hot topic as Baby Boomers ponder how best to pass on the proceeds of their life’s work to their business colleagues and family members.

Whatever the source of your wealth you’re entitled to protect it and ensure it will make a difference to the lives of your beneficiaries.

In this article we’ll give you an expert view on how to plan for final financial matters, and ensure that your wealth – and the benefits it brings – lives on.

Passing on your business assets

You may already be considering a succession plan for your business when the time comes for you to retire, or to ensure there are plans in place in case of sudden illness or death.

But you’d be in the minority: surveys suggest that only around a third (34%) of UK-based business directors already have such a plan in place.

Business owners face a specific set of challenges in this area – subject to the stage of their business – which must ensure business succession issues are carefully taken into account.

The earlier you begin business succession planning, the better. If you leave it to chance there may be devastating consequences not just for your fellow directors as well as for your family beneficiaries.

Your options include:

Trusts: One of the most regular oversights by company directors is not writing a business trust into their will. To qualify for 100% business property relief, shares of a business intended to be a going concern after a director’s death must pass via the ‘legacy’ clause in the will to a specific beneficiary, as per S39A Inheritance Tax Act 1984. That specific beneficiary should be a trust.

Gifts: Consider gifting strategies to share wealth while reducing tax burdens. If you are starting out as a property developer/investor, this would be complemented with a smart company structure involving different share classes where necessary.

Cross-option – How will the deceased shareholder’s family and the company’s other shareholders be fairly compensated for their relative stake in the business? This is a complex area, but has a relatively simple, satisfactory and water-tight solution – a cross-option agreement – if you get the right advice.

It’s no secret that business succession planning is a minefield. That’s why the earlier you can start to make provisions for the future, the better the outcome will be.

Whatever the stage of your business, it’s crucial to take a step back and consider the requirements of the company going forward, should the worst happen.

Legacy planning for your family

Of course, you’re also likely to want to seek advice about passing your wealth to family members – potentially several generations of them.

Strategic intergenerational wealth planning takes into account your financial assets, including land and property, businesses, stocks and shares, and any beneficial interest you may have in inherited wealth or lifetime settlements made by family members.

Effective planning helps to protect and secure the transfer of economic resources and their benefits from one generation to the next, giving them firm financial ground to make the most of their lives.

Unless wealth is managed carefully and strategically, it can be eroded remarkably quickly – for example by burdensome inheritance tax – leaving your loved ones to struggle.

Property plays a crucial role in intergenerational wealth. According to data, over-50s in the UK hold 78% of privately held housing wealth – and it must eventually find a home somewhere else.

That’s why effective wealth management involves assessing each property’s value, potential for growth and income-generating capabilities. Regular property evaluations and understanding market trends are essential to make informed decisions around property, as part of your overall wealth strategy.

Wealth managers can collaborate with families to ensure smooth property transfers to the next generation. Experts address legal aspects, minimise taxes and resolve potential disputes. It’s worth establishing structures like family trusts to facilitate the management and control of property assets.

No matter your situation, successful legacy planning – from successful business succession planning to intergenerational wealth management – requires a blend of expertise. There’s much to gain from talking to a trusted adviser who can join all the dots, managing diverse elements of your wealth and resources to sustainably maximise your wealth.

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