Future Planning for Business Owners: A Comprehensive Legal Guide

Jobeth Copping-Barrett

Planning for the future is a crucial aspect of managing a business. As a business owner, the decisions you make today will impact the security and prosperity of your enterprise and your family in the years to come. This article delves into the essential legal topics you need to consider when crafting your future planning strategy, including Wills, Trusts, and probate. 

Wills 

A Will is a legal document that outlines how your assets will be distributed upon your death. It is imperative for business owners to have a well-drafted Will to ensure that their wishes are respected and to minimise potential disputes.  

Will Trusts 

Will Trusts are established within your Will to manage certain assets for the benefit of your beneficiaries. As a business owner, setting up a will trust can help safeguard your business assets and ensure they are managed according to your wishes, providing financial security for your family. 

There are a couple of types of Wills to consider: 

Single Wills 

A single Will is designed for an individual and specifies how their assets should be handled after their death. This type of Will is ideal for business owners who wish to ensure that their personal and business assets are allocated according to their preferences. 

Mirror Wills 

Mirror wills are suitable for couples who wish to make similar  provisions for each other in their wills, with minor variations to account for gifts of personal possessions such as jewellery and watches. These Wills are particularly useful for business owners who want to ensure that their business interests are protected and that their partner is taken care of. 

Trusts and Family Investment Companies (FICs) 

Trusts and FICs are sophisticated tools for managing and protecting your assets. They provide flexibility and control over how your wealth is distributed and can be particularly beneficial for business owners. 

Trusts 

Trusts are legal arrangements that allow you to transfer assets to a trustee to manage on behalf of your beneficiaries. There are various types of trusts, each with its own advantages. For business owners, trusts can offer tax benefits, asset protection, and ensure that your business remains within the family. 

Family Investment Companies (FICs) 

FICs are private limited companies used to manage family wealth. Business owners might use an FIC to hold investments and other assets, providing tax efficiency and control over how wealth is distributed among family members. FICs can be a powerful tool for preserving your business legacy. 

Lasting Powers of Attorney (LPAs) 

Lasting Powers of Attorney (LPAs) are legal documents that let you appoint someone to make decisions if you become unable to do so, with two types: health and welfare, and financial and property matters. Health and welfare LPAs cover decisions about your daily routine, medical care, and life-sustaining treatment, while financial and property LPAs cover managing finances and property. LPAs are essential for business owners, ensuring that trusted individuals can manage business operations smoothly if they become incapacitated, thus preventing potential financial losses and ensuring that both personal and business affairs are managed according to your wishes. 

Probate 

Probate is the legal process of administering a deceased person’s estate. Understanding the probate process is essential for business owners to ensure a smooth transition of their assets following their death.  

Effective future planning is an essential strategy for business owners to ensure that their wealth is protected, maximised, and passed on to the next generation efficiently. One critical aspect of this planning involves robust tax strategies, particularly in mitigating Inheritance Tax (IHT). By utilising tools such as trusts and Family Investment Companies (FICs), alongside careful structuring of assets and investments, business owners can significantly reduce their IHT liabilities. This not only preserves the value of their estate but also ensures that their loved ones benefit from their hard-earned wealth without the burden of excessive tax bills.  

How Bermans can help 

Future planning is a vital part of safeguarding your business and ensuring the well-being of your family. By considering these areas, you can create a robust plan that provides peace of mind and secures your legacy. Bermans can help you navigate these complex areas and tailor a strategy that meets your unique needs. 

Preparing for the future allows you to focus on growing your business today, knowing that both your enterprise and your loved ones are protected. Take the first step towards comprehensive future planning and consult with our experienced legal team to ensure your business and family’s future is in good hands. 

Contact Jobeth, Senior Associate, Private Client.