Key Questions To Ask When Protecting Personal Wealth and Business Succession

You may want to sell your business, keep it in the family or find a solution in between. Whatever you decide, there are choices to be made that will impact you and your family.

What do I need to do ahead of retirement, or before stepping back from my business?

The time required to synchronise your personal and business plans should not be underestimated, and things might not always go as initially planned. Because of this, it’s important to implement legal structures and governance early on to future proof your plans, making allowances for bumps along the road.

You may wish to consider:

Updating your Will - If there have been any major changes in your family of personal circumstances.
Making the most of the tax reliefs available - Incentives and tax reliefs can help mitigate the tax burden for you, your business, and any potential investors.
Have you considered wealth protection? - Make sure your personal affairs are managed from a legal standpoint with Wills, LPAs, pre and post-nuptial agreements, and trusts, so that tax liabilities don’t prevent you leaving your business as you would wish.
Are all my personal documents and business agreements aligned? - Make sure your business and personal documents sync up with your wishes. This will keep your plans watertight against potential disputes from stakeholders.

Powers of Attorney for your business

What happens if I’m no longer able to run my business – who can take over for me?

As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions due to declining mental capacity, illness or an accident.

So you don’t leave your business exposed to risk, it’s important to consider: who’ll make the important decisions to keep the business running? Who will pay the salaries and invoices, and manage relationships between colleagues and other stakeholders?

Business continuity doesn’t happen overnight, so making a plan in advance and for the unexpected, is the best way to make sure a transition can happen with relatively short notice. Succession planning should also include having a competent management team around you, who can support your relatives if needed.

Having a Lasting Power of Attorney (LPA) in place for your business gives relatives or trusted colleagues the legal right to make decisions on behalf of your business. You’ll need to appoint a deputy or attorney or support the person acting as one. Our experts can explain how this works, and how the different types of Power of Attorney can be registered, activated, and used.

Have I got the correct paperwork in place to meet my business needs?

Ensuring your business is covered from a legal standpoint is the most effective way of protecting your wealth, should anything happen. Ensure that the correct paperwork is in place for every eventuality of your business, whether day-to-day or for exit.

The most common governance can include:

Shareholder agreements – An agreement between shareholders on how the company should operate, and defines rights and obligations.
Articles of Association – A written list of how the company should be run agreed by the shareholders, guarantors, directors and company secretary.
Partnership agreements – A document which sets out the contractual obligations and day-to-day running structure of the business.
Cross Option agreements – Gives shareholders the opportunity to buy back shares if the business owner passes away or is incapacitated.

What are discretionary trusts, and can they protect my business?

Discretionary trusts are often used to protect your business and family wealth. The trust itself creates a form of barrier between trustees and the chosen beneficiaries, where no beneficiary has automatic access to the contents of the trust.