Estate planning for business owners

Unquoted shares in a trading business can enjoy up to 100% relief from Inheritance Tax if they qualify for Business Relief (BR). As such, it is important to review your will to make sure that valuable tax planning opportunities are considered.

Lasting Powers of Attorney (LPAs)

Lifetime gifts, appropriately timed and structured, can form an important part of effective tax planning. The setting up of trusts could also be considered. Trusts can be complex, but can have many advantages, especially where business assets are involved.

Cross-option agreements

By Simon Mitchell and Amy Lane, Wills, Estate & Tax Planning team at Thomson Snell & Passmore

As business owners approach retirement, it is important to consider estate planning, especially if you are thinking of selling your business.

Here are some of the key things to consider: Ensure your will is up to date

A will is the most basic estate planning document that enables you to specify how your assets will be distributed on death.

An LPA enables you to appoint individuals to manage your financial affairs if you’re ever in a position where they are physically or mentally unable to do so. This is particularly important for those who run their own business.

A company director will automatically cease to be a director if they lack the physical or mental capacity to act in the role. However, where the director also holds shares in the business the attorney can potentially act on their behalf to secure the appointment of new directors, enabling the business to continue or be sold.

Lifetime gifts and trusts

BR cannot always be relied upon as a taxefficient means of passing capital to younger generations, especially where there is a strong probability that the business will be sold or liquidated before the present owners die.