The new pension freedom rules, introduced in April
2015, have offered real opportunities of tax savings and
have significantly changed how pension funds are best
managed, so taking specialist advice on this area is key.
I own a business with a number of fellow
shareholders, what do I need to have in place in
case one of us dies?
Firstly a shareholders’ agreement should be in place
which stipulates what happens to shares in the business
if one of you dies.
Such agreements often include cross options, under
which the surviving shareholders will have the option
to purchase the shares at an agreed price, ensuring
the families receive fair value while also ensuring the
ongoing success of the business.
Secondly, all parties should take out a life insurance
policy to ensure there are sufficient funds available
for the surviving shareholders to purchase the shares
at the price determined in the cross option. This
insurance should be written in trust so that it will not
form part of an estate on death.
Finally, all Wills should be updated to ensure shares
are dealt with in such a way that after the surviving
shareholders exercise the option to purchase the shares,
family members continue to benefit from 100 per cent
relief from IHT which is available on business assets.
How can Lasting Powers of Attorney help me
plan for the future?
LPAs are legal documents which allow a person to
appoint attorneys to make decisions on their behalf
should they lose mental capacity or be unable to make
decisions due to, for instance, an accident or illness.
There are two types of LPA – health and welfare, and
property and financial.
Property and financial LPAs allow an attorney to
make decisions on matters such as buying and selling
a property, paying bills and handling investments. I
have seen situations where, without an LPA in place, a
business has simply been unable to operate because of
the loss of input from one key individual.
The benefits of having a financial LPA in place for
a business owner cannot be overstated. Should a
business owner lose mental capacity without having
an attorney in place, the consequences for the business
can be disastrous.
Health and welfare LPAs authorise the attorney to
make decisions on how the incapacitated person
should be cared for, including what medical treatment
they should receive. It is even possible to extend this
authority to cover decisions concerning whether or not
the individual concerned should or should not receive
life sustaining treatment.
I’ve invested in Business Property Relief (BPR)qualifying investments, is there anything
specific I need to think about regarding these
when it comes to writing my Will?
Where anybody, but in particular a married couple,
own assets that qualify for BPR, be they an interest
in their own private trading business or alternatively
BPR-qualifying investments, then it is very important
that their Wills are appropriately structured. More
often than not this is done by directing those assets
into a discretionary trust to ensure that the long term
inheritance tax savings benefits of those assets are
preserved for the family.
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| ONSIDE WINTER 2016
Kathryn Harwood
[email protected]
01772 904359
Head of the Wills and
Estate Planning Team at
Napthens Solicitors.