In a time when both our business models and personal relationships are being tested to their limits, it is important to understand how the breakdown of a relationship can affect your business.
This webinar is essential viewing for all entrepreneurs who are:
- Married or considering marriage in the future
- With a business partner who is married or might get married in the future
- In business with their romantic partner
- Employing their romantic partner
- With business loans secured against a jointly owned residence
Your spouse could “own” 50% of your business, even if they have never been involved with it.
What does this mean?
If you separate you might need to “buy them out” or give them shares in the business. There are also tax implications.
In this webinar we will consider:
- Real-life separation case studies from business owners who started their businesses before and during marriage, including horror stories that you will want to avoid.
- Cost-effective legal steps to help you protect your business whilst ensuring you can provide fairly for your spouse, including pre-nups, post-nups, cohabitation agreements and trusts.
- Practical tips for anyone considering divorce who does not have protections in place.
- Legal strategies to negotiate a fair outcome for everyone.
Why can we talk to you about this? As law firm specialising in Family and Private Wealth firm, we help entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend. We also deal with the legal fall-out for those who do not take these steps.
Other Allard Bailey webinars for Fresh Business Thinking:
- How to use the law to align your personal and professional goals so that you can maximise growth in all areas: View here.
- How to protect your business from events in your personal life that can have a significant impact, such as your unexpected incapacity, death or personal debt: View here.
When you run a business there is always an interaction between your professional and personal life, so it is important to understand how the decisions you make in your private life can impact your business.
This is the second in a three-part webinar series in which we look at how to legally align your professional and personal interests so that:
- the value of your wealth is maximised
- your business is protected from significant life events
- you can achieve your ultimate life goals.
In this webinar we will focus on how to shield your business from unexpected life events that can have a significant and sometimes catastrophic impact.
You will learn about the Four Ds and how they can affect your business. In all scenarios we will discuss cost-effective legal tools to protect your business, when and how to use them.
- What can happen to your business if you die without a will?
- How to ensure your business can continue to operate without you
- The difference between a Business Will and a regular Will
- Can anyone fill management functions if sudden incapacity from an accident or illness causes you or a business partner to temporarily disappear from the business?
- How to minimise the operational impact of temporary incapacity using a Business Lasting Power of Attorney
- How to keep the business running, or allow it to be sold, if you experience long-term incapacity
- Is your spouse entitled to 50% of your business?
- How to ring fence pre-existing assets including your business
- Ways to shield your business from the financial and emotional impact of relationship breakdown
- When your personal finances will affect your business
- How company structures and Trusts can shield your business from personal creditors
In the final webinar of this series, we will look further at how your family and personal relationships can affect your business and how effective planning can minimise this.
A replay of the first webinar which explained how you can use the law to align your personal and professional interests and maximise growth in all areas can be viewed here.
Why can we talk to you about this? We specialise in helping entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend. We also deal with the legal fall-out for those who do not take these steps.
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When you run a business there is always an overlap between your professional and personal life. To ensure you can realise your goals, it is important to understand how the decisions you make in your private life can impact your business interests and vice versa.
We specialise in helping entrepreneurs, directors and investors to protect their professional interests from personal life events, so they can achieve their lifetime ambitions and leave the legacy they intend. We also deal with the legal fall-out for those who do not take these steps.
This is the first in a three-part webinar series in which we look at how to legally align your professional and personal interests so that:
- the value of your wealth is maximised
- your business is protected from significant life events
- you can achieve your ultimate life goals.
In the first webinar we will focus on how to grow efficiently and you will learn:
- Whether the company structure you have in place will help or hinder your personal goals including enjoying life now or in retirement, creating a family business, leaving a personal legacy and charitable aims.
- How to grow your business in a way that allows you to meet both your professional and personal ambitions.
- How to structure your personal wealth to achieve your short, medium and long-term goals.
- How to protect your long-term interests and those of your family, including vulnerable persons, using different legal tools.
In part 2, we will discuss the legal tools you can use to shield your business from the impact of personal life events such as unexpected incapacity, death, marriage and divorce.
In part 3, we will consider how your personal relationships can affect your business and how effective planning can minimise this.//get_template_part( 'template-parts/post/content', get_post_format() );
The reality is that anyone can become incapacitated at any time through illness or accident, so it makes sense to prepare for that possibility. Depending on the length of time you are out of action, the consequences for your life may be minimal, but the consequences for your business could be more significant. For example:
- If you are the only signatory for payroll, what will happen if you are unable to sign for the foreseeable future?
- How will the business operate if a Co-Director is unable to co-sign contracts or guarantees?
What is a Business LPA?
A Business Lasting Power of Attorney (LPA) is an effective way of protecting your business from the operational impact of sudden and unforeseen absence.
As with all LPAs, it is a legally binding document, which assigns one or more trusted people to help you make decisions or to make decisions on your behalf. These trusted people are called Attorneys. For more details on Lasting Power of Attorneys please see Lasting Powers of Attorney.
A Business LPA deals with business assets only and should appoint an Attorney with the requisite qualifications and abilities to manage your business for you for a sustained period if necessary. For example, if you are a dentist running a dental practice, then appointing your spouse who has expertise in say, retail, is not going to be suitable. Rather, partners of your dental practice or other such professionals would be better suited to managing your practice. It is important to note that some industries impose regulatory restrictions on who can manage a business within that profession.
Business LPA’s can be as detailed as you like and can appoint multiple Attorneys to handle different areas of the business. They provide a platform for you to explain to your Attorney(s) exactly how you would like your business to be run and what they should do with it in certain sets of circumstances. This may include the way in which they continue to keep it going whilst you are unable to, or the steps you would like them to take to close the business by way of sale, transfer or otherwise.
Your Business LPA should also give permission to your Attorney(s) to employ the services of other professionals, generally or specifically, to assist them. As, for example, if you have a financial advisor who usually helps you with certain investments, they will require your express permission to liaise with your Attorney or they would be unable to continue managing your investments without a court order.
Are There Other options?
Another way in which this can be addressed is by putting in place a Property and Financial Affairs Lasting Power of Attorney in which you appoint an Attorney who would be responsible for looking after your interests in your business.
However, a Business LPA ensures an appropriate separation between your business and personal affairs so that you have the right person looking after each aspect of your life. Putting in place a detailed business LPA will ensure that your business interests continue to operate smoothly in the event that you are unable to manage them yourself. You might consider making it a prerequisite for all company stakeholders.
In addition to a Business LPA we also recommend that business owners consider succession planning and prepare a detailed Business Will to preserve their business and personal interests should the worst happen, you can read more about succession planning and Business Wills here.
For more information on preparing a detailed and effective Business Lasting Power of Attorney to protect your company contact Sangeeta Rabadia.//get_template_part( 'template-parts/post/content', get_post_format() );
Key Considerations for Business Owners
The most common business types are sole traders, partnerships and incorporated companies. Depending on the businesses structure, documents such as shareholder agreements, partnership agreements and articles of association usually set out the basis for how it is owned and managed. It is also possible for these documents to dictate what happens to each owners’ share in the business should they die.
In our experience, these terms are often draconian, leading to forced buy outs, depreciation of value and occasionally even dissolution of an owners share with no benefit to their heirs. It is therefore important to ensure there are adequate business documents with appropriate options for your heirs and surviving business associates to consider on your passing.
It is also important that you deal with your business properly within your Will to ensure that it is administered effectively and passed to your intended heirs. The contents of your Will should reflect the options contained within the business documents and provide heirs with the appropriate legal route to maximise the value of their inheritance.
Below are examples of some of the things you should consider:
- Should you appoint executors who are solely responsible for the administration of your business? While you may prefer for family members to deal with your personal assets, it is often more appropriate for business partners or other professionals such as solicitors to deal with business assets. This can be particularly important if you would like the business to continue operating.
- Do you need to assign trustees to manage business interests for minors? If your beneficiaries are minor children they are not going to be able to manage the business themselves or make decisions as to whether they should retain or sell their share. You could consider setting up trusts or other structures to ensure their interest in the business is looked after by competent people until they can take over themselves. This ensures that the business can continue to operate smoothly and that practical day to day matters can be addressed with ease.
- Are any of your beneficiaries vulnerable? For vulnerable beneficiaries who may never be able to manage the assets themselves, it is important to ensure that a long-term structure is put in place to protect their interests. You could consider whether to set up a trust or appoint an appropriate deputy to act on their behalf. You might decide it is more appropriate for the business, or your share, to be sold and proceeds then held for the beneficiary. Whatever you choose, it is important that your Will provides for the mechanism in which your wishes can be carried out.
- Would you like your employees to receive a share of the business? It is not uncommon for small business owners who have grown their company with a loyal team to want some or all of their employees to receive some value from the business. In this situation you might consider an employee share scheme or a more general share in the profits.
- What are the tax implications? As with other assets, the value of your business may be subject to inheritance tax. A qualified professional can help you consider what reliefs may be available to your beneficiaries, what you can do during your lifetime and what you can do within the terms of your Will to maximise these tax reliefs. For example, we worked with a client who sold his marketing company for a large sum, which had obvious benefits to him in life, but negated the availability of business property relief on death. We subsequently advised and assisted him in the investment of the sale proceeds into vehicles which would qualify for tax reliefs when he died. We can also assist you in managing your personal taxes, such as Income tax and Capital Gains Tax, which are linked to your profit share from your business interests.
Other Business Interests
The above considerations are not just important for people who own a business. They are also necessary if you have business interests such as rental properties, investment portfolios and other stocks and shares.
The way in which these assets are owned will have just as much impact on how they are inherited and how much inheritance tax is paid on your death. For example, rental properties will not necessarily qualify for special inheritance tax reliefs. An effective solicitor can help you structure your portfolio to not only maximise the use of tax reliefs during your life time, but also ensure a smooth transition to your beneficiaries so that they do not pay more inheritance tax than they need to. At Allard Bailey Family Law, we achieve this with a combination of lifetime planning and implementation as well as succession planning through effective Wills.
A Special Note on Investment Portfolios
Investment portfolios are often held in a variety of structures, depending on what your financial advisor believes to be most effective for each investment. If your advisor does not have an overview of your entire estate, it may mean that you minimise your liability for one tax, whilst inadvertently increasing the liability for another tax. It is therefore advisable for your entire estate and holdings to be reviewed periodically.
You should also be aware that if your investments are held in trust they will fall out of your estate so you cannot dictate how these assets are dealt with in your Will.
To ensure that your wishes can be carried out in the best way for you and your beneficiaries, it is advisable to seek professional advice when considering how to plan the succession of your business and other investments. It is also advisable to prepare a detailed Business Lasting Power of Attorney to protect your business in the event of unforeseen absence caused by sudden incapacity. For more information on how we can assist you please contact Sangeeta Rabadia.//get_template_part( 'template-parts/post/content', get_post_format() );
When you run your own business, there will always be an overlap between your professional and personal life. To ensure you can achieve both your business and personal aspirations, it is important that your solicitors fully understand how the decisions you make in your private life can impact your business interests.
Our team advises entrepreneurs, company directors and investors on matters in which their business and personal lives converge. From succession and inheritance tax planning to divorce and separation, we help business owners maximise the effectiveness of their investments and protect their interests from adverse third parties.
You can join this year’s regional finals from the comfort of your own home or office. Join us as we raise a glass and celebrate all things entrepreneurial on Wednesday 23rd September 2020.
The solution is a General Power of Attorney (GPA), which can be drafted by a solicitor and is valid from the moment it is executed. A GPA is usually valid for 12 months and can be as specific or general as you want it to be, authorising a named person to undertake defined business functions on your behalf and, if necessary, covering your personal finances too.
We recommend that all small and medium sized business owners who do not have a contingency in place execute a General Power of Attorney, whilst simultaneously registering a Lasting Power of Attorney.
Although we would not advise you to wait until the last minute, it is possible to put an urgent General Power of Attorney in place if you start to show symptoms of illness.
For further information please contact our resident Private Wealth Specialist Sangeeta Rabadia.//get_template_part( 'template-parts/post/content', get_post_format() );