Protecting Your Family Business Legacy: A Comprehensive Guide

For many, a family business is more than just a source of income; it’s a legacy, a testament to hard work, and a beacon of family pride.

However, the complexities of life and business, including unforeseen events such as incapacity or death, can pose significant risks to this legacy. Understanding and implementing essential protective measures can ensure your business not only survives but thrives for generations to come.

The Pillars of Business Protection

The Power of a Will

A well-crafted will is your first line of defence in protecting both your personal estate and your business interests. For family business owners, it’s crucial to consider how your shares and business assets are handled after your death.

Structuring your will to leverage Business Relief from inheritance tax can save your estate significant amounts and ensure your business assets are passed on efficiently.

Shareholders’ Agreement

This agreement is vital for maintaining control within the business while safeguarding financial interests.

It acts as a blueprint for what happens to a deceased shareholder’s shares, often incorporating a cross-option agreement that allows remaining shareholders or the deceased’s executors to buy or sell shares, maintaining business continuity and protecting family interests.

Life Insurance in Trust

Life insurance policies, written in trust for business shareholders, provide the financial means to buy back shares from the estate of a deceased shareholder.

This mechanism ensures that the business remains in the hands of the surviving shareholders while financially compensating the deceased’s family, all in a tax-efficient manner.

Preparing for Incapacity with an LPA

A Lasting Power of Attorney (LPA) is indispensable for planning against incapacity. A property & financial affairs LPA allows appointed attorneys to manage the donor’s business interests, ensuring the business can continue operating smoothly even if the owner cannot make decisions themselves.

The Challenges and Solutions

While setting up these protective measures, it’s essential to navigate the specific limitations and requirements. For instance, company directors need to consider their fiduciary duties when appointing an attorney under an LPA, and companies must ensure their articles of association are updated to reflect current needs and legal standards.

Taking the Next Step

Protecting your family business requires foresight, planning, and the right legal advice. At The Legacy Wills Company, we specialise in providing comprehensive estate and business succession planning tailored to the unique needs of family businesses. With over 25 years of experience, our team is here to guide you through every step of securing your business legacy.

Don’t leave your family business’s future to chance. For more information call us today on 0208 547 2583 and book a discovery call with one of our advisors.

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Client Testimonial

“Having seen John of Legacy Wills present at a property event, it was clear he had both the breadth of knowledge and experience and also the ability to make a very dry subject both understandable and engaging. That’s a tough call when talking about Wills, Trusts and death. John produced Wills and POA’s for myself and my wife in a timely, effective and reasonable manner. I have subsequently recommended him to numerous colleagues and friends to cut out the jargon and challenges surrounding this critical protection, which is too often deferred or neglected.”

Dan Norman