Succession Planning
If you are planning to gift your shareholding to the next generation, should you do this in your lifetime or in your Will? If you are planning a lifetime gift, how do you protect the next generation in case they divorce or become bankrupt and how do you compensate your other children who do not work in the business? What if the next generation then decide to leave the business? Do you need a family Constitution or shareholder’s agreement to govern their exit and protect the business from a destructive dispute? If you are considering a gift on death, your shares will be revalued for capital gains tax purposes but how do you ensure that inheritance tax business property relief is maximised in your Will? Are there any transfer provisions in the articles of association of your business which mean that other shareholders could block the beneficiaries being registered as the new shareholders?
And what if you should fall ill and lose mental capacity before you die. Do you have Keyman and Critical illness insurance? Who would exercise the voting control on your shareholding under your lasting power of attorney (LPA)? Do you need a separate LPA for your shareholding?
