Solicitors Specialising in Family Wealth Planning
Careful succession planning is crucial for both family wealth and businesses – especially those businesses that are family-owned. A well-thought out, meticulous and strategic succession plan facilitates the smooth transition of your family wealth or business from one generation to the next. And it can certainly be key to the ongoing success of the commercial enterprise you have worked to build. Experienced succession lawyers are integral to your succession plans. Their help and guidance will ensure your family wealth and business continues to flourish in the hands of future generations, your family’s financial needs are taken care of, and your legacy is protected.
Our highly specialist team handle succession and wealth advice both for clients local to our offices in Wiltshire and Hampshire, and nationwide.
For initial FREE phone advice from one of our specialist Succession Lawyers, please call FREEPHONE 0800 1404544 or one of our local office numbers.
What is succession planning?
Succession planning prayers both to creating a strategy to pass on your wealth to secure your family’s financial future and to handing over of a family business from one generation to the next.
Here at Bonallack & Bishop, we handle both.
However, ensuring a smooth transition is far from straightforward and often presents one of the biggest challenges a family or family business can face. It is a complex process, requiring a thorough appreciation of the personal, legal, and financial implications your choices may bring about.
Succession planning is an incredibly complex area of law. Succession lawyers need a thorough grasp not only of their client’s commercial reality but also of wills and probate law and procedures, taxation issues and other pertinent considerations such as powers of attorney.
Our succession lawyers are recognised experts in their field. They will take the time to get to know you and your business and develop a deep understanding of your future plans. They will work closely with you to create and execute a comprehensive succession plan and structure your estate to safeguard the continued financial security of your family and to minimise your tax liabilities.
And the team includes Elizabeth Webbe, a highly regarded succession lawyer and member of our team, is part of STEP – the Society of Trust and 
Estate Practitioners, the leading professional body for advisors working in inheritance and succession planning. We also have a dedicated in-house tax accountant whose accounting skills perfectly complement those of our succession lawyers, enabling us to add even more value to our client’s estate planning strategies. among the strategies we will look at to see how we can best advice on your individual family wealth planning needs are strategic gifting, a variety of trusts , complex wills, collapsing trusts, advising on existing and/or future corporate or partnership structures from a family wealth perspective, Family Bibles, succession strategies and more.
What the next generation needs – our Succession Lawyers can help
There are increasing number of Britons who now own over £1 million, including their own home. In fact it is estimated that between them, they own around 80% of the U.K.’s net wealth. And it seems likely that around 70% of this wealth will be passed onto the next generation. That’s why proper succession planning, taking into account inheritance tax is so important, not just you but your children and grandchildren.
Succession planning for your family business – why you need an effective plan
The UK family business sector is simply huge. According to the IFB Research Foundation, it accounts for a remarkable 90% of all private firms – a staggering 4.8 million businesses, generating £1.7 trillion in turnover.
But succession planning when it comes to the family business can be a delicate topic, necessitating potentially uncomfortable conversations between family members and sometimes causing disappointment and upset. Competing ambitions, opposing views and contradictory visions for the future can create considerable tension and ill-feeling.
As a result, family business owners sometimes delay succession planning, convincing themselves they have plenty of time to address the issue or just hoping for the best should circumstances arise that mean they are no longer able to run the business. Tempting as it may be to put your head in the sand to avoid rocking the boat, this approach can have catastrophic consequences for both your business and your family.
Poor succession planning leaves your family business vulnerable to internal power struggles and a lack of clear leadership. Your business will likely suffer as key individuals act in their own best interests as opposed to those of the business. Less competent individuals may end up in control, causing those with valuable skills and know-how to go elsewhere, taking their talent and experience with them. The upshot is an unstable business, unsettled employees and reduced profitability. In worst case scenarios, insufficient succession planning can lead to the demise of your family business and leave your financial well-being, and that of your family, in jeopardy.
Successful succession planning begins long before you intend to pass the business to the next generation. When you are proactive and deal with the issue head-on, you can ensure you retain control of the situation and are not forced into making business-critical decisions in a rush and on the back foot.
On a practical business level, effective succession planning involves identifying those you envisage taking the reins when you step down and ensuring everyone knows their roles and where they stand. By taking steps to encourage their participation in commercial operations and furnishing them with the skills to do the job well, they will be ready to take over when the time comes.
What does effective succession planning involve?
On an estate planning level, the types of issues you may need to consider include the following:
1. Making a will
Estate planning and succession planning must be considered in tandem especially if your family business will comprise a significant proportion of your overall estate. Accordingly, succession planning invariably involves making a will stating how your estate should be distributed following your death. In addition to giving you peace of mind that your wishes will be respected, a will removes any uncertainty for those left behind and significantly reduces the risk of disputes arising over the distribution of your estate. Your will should complement your Company Memorandum and Articles of Association.
If you die without leaving a will, you are said to have died ‘intestate’. This means that your assets will be distributed in accordance with the Intestacy Rules. These rules can sometimes have unexpected and unwelcome consequences, with distant relatives benefitting over your long-term partner if you were not married. It is, therefore, vital to make a will to ensure your affairs are dealt with as you wish when you are gone.
Our succession lawyers have extensive experience in all wills and probate matters. They will guide you through the will-making process, ensuring your wishes for the future of the family business and all other assets are accurately recorded. They will prepare a will that is watertight, clear, and unambiguous, and meets all validity requirements.
Click here to read more about Writing a Will
2. Granting a Lasting Powers of Attorney
A Lasting Power of Attorney ensures important decisions are taken by those you trust if there comes a time when you can no longer make them for yourself. There are two types of Lasting Powers of Attorney in the UK:
1. A Lasting Power of Attorney for Property and Financial Affairs and
2. A Health and Welfare Power of Attorney.
In estate planning, a Lasting Power of Attorney for Property and Financial Affairs can be invaluable in ensuring your financial interests, including the family business, are looked after by individuals of your choosing.
When you make a Lasting Power of Attorney for Property and Financial Affairs, you nominate people you trust to make any financial decisions on your behalf. Those individuals are known as your ‘attorneys.’ Your attorneys will undertake such tasks as managing your bank accounts and dealing with your property.
Without a Property and Financial Affairs Lasting Power of Attorney in place, even the most carefully thought-out succession plans can fall by the wayside, with your next of kin or business partners finding themselves excluded from decisions regarding the future of the business. However, it is important to understand that a Lasting Power of Attorney for Property and Financial Affairs can be used as soon as you register it, whether or not you have lost mental capacity. As such, it is vital to nominate attorneys wisely, ensuring they are people you know and trust.
Our succession lawyers regularly assist clients wishing to make a Lasting Power of Attorney for Property and Financial Affairs. They understand that contemplating a time when you might not be in a position to manage your own affairs can be unsettling, and they will guide you through the process sensitively, working closely with you to ensure the documentation accurately reflects your wishes and protects your interests.
You could also choose a special sort of Lasting Power of Attorney solely for running your business – you could choose a business associate for this role.
Click here to read more about the Lasting Power of Attorney
3. Setting up trusts
A trust is a legal arrangement under which the ‘settlor’ transfers assets into a ‘trust’ to be managed by ‘trustees’ on behalf of ‘beneficiaries’. Trusts can be an invaluable family wealth planning tool, but trusts law is complex, tricky to navigate and full of pitfalls for the unwary. It is, therefore, crucial to work with experienced succession lawyers like ours to ensure your trust is properly prepared and does what you need it to.
When you place assets in a trust, they no longer belong to you but to the beneficiaries of the trust. Individuals use trusts for all sorts of reasons, including protecting their assets from creditors and providing for children and vulnerable loved ones. In the context of wealth planning, trusts can assist in reducing the inheritance tax due on your estate and protect valuable family assets, including the family business, for future generations. You can establish a trust either during your lifetime or under your will.
Selecting someone to act as a trustee is an integral part of the trust process. Trustees have a number of onerous legal obligations and are expected to have an awareness and understanding of the often complex principles involved in estate planning. To mitigate the stress this can place on friends and family, many people choose a professional trustee solicitor to take on the role of trustee.
Our succession lawyers have decades of experience acting as professional trustees. Their expertise in the field makes them the perfect choice to administer your trust and safeguard your beneficiaries’ interests.
The types of tasks our succession lawyers regularly undertake, whether acting as professional trustee or legal advisor, include the following:
· Advising on the appropriate type of trust in your circumstances.
· Preparing the trust documentation and ensuring it complies with all legal criteria.
· Ensuring the trustees understand their legal duties and assisting them in executing those duties where necessary.
· Preparing trust accounts.
· Giving tax advice.
· Preparing tax returns and submitting them to HMRC.
· Managing trust assets.
· Winding up the trust when it has served its purpose.
Trusts offer a useful way of reducing your inheritance tax liability. By placing specific assets in trust for others, you effectively remove them from your estate, and they will not count towards its value for inheritance tax purposes.
Click here to read more about Trusts and how they could work for you
4. Inheritance tax planning
Tax considerations, particularly those relating to inheritance tax, play a crucial role in family wealth planning.
Inheritance tax is a one-off tax payable when your estate is transferred to your beneficiaries upon your death. Not everybody’s estate is subject to inheritance tax. Estates valued beneath the inheritance tax threshold, which is set at £325,000 (as at February 2024), are usually exempt from inheritance tax.
However, given that the average house cost now easily exceeds that amount, inheritance tax can no longer be seen as only impacting the rich. Inheritance tax is a hefty tax, charged at a rate of 40% of the value of your Estate that exceeds £325,000. So, if your entire Estate is worth £500,000, the inheritance tax amount will be 40% of £175,000.
We are all understandably keen to ensure that our loved ones benefit to the greatest possible extent from the assets we have worked so hard to accumulate throughout our lifetimes. Succession lawyers are ideally placed to help you with this. By developing a carefully thought-out inheritance tax strategy as part of your overall family wealth planning, our succession lawyers will significantly reduce the impact of inheritance tax on your Estate.
Click here to read more about inheritance tax planning
How our Succession Lawyers can help you
The kind of additional advice and support our team regularly provide for our clients includes the following:
· Helping you to choose beneficiaries.
Choosing your beneficiaries wisely can be a straightforward way of reducing your inheritance tax liabilities. For example, if you bequeath your estate to your wife or husband or leave it to a charity, there is usually no inheritance tax due.
· Advising on gifts.
Gifting money to those close to you during your lifetime not only enables you to give them a head start in life sooner, but it can also be a wise move in the context of family wealth planning. Provided the gifts adhere to the applicable legal requirements, they can significantly reduce the amount of inheritance tax due.
· Advice on existing and/or future corporate or partnership structures – from a family wealth perspective
· Ensuring you use any property allowances.
You may be able to increase your tax-free allowance by making specific gifts in your will. For example, if you leave your home to your children or grandchildren, the Government currently allows you an additional tax-free amount of £175,000, increasing your tax-free allowance from £325,000 to £500,000.
· Completing and filing all requisite documentation.
Our succession lawyers will relieve the administrative burden of inheritance tax by preparing and filing all relevant documentation, such as inheritance tax returns.
· Ensuring the provisions of your will minimise your inheritance tax liability.
· Dealing with any decisions made by HMRC, or the tax tribunals, including appealing those decisions if necessary.
· Pension planning – which involve a wealth of possible structures and opportunities
· Advising on the use of trusts
· Trust administration
Administering a trust can be complex. The duties involved can be onerous for those with busy lives, or who find dealing with beneficiaries may themselves be vulnerable people, difficult or distressing. That’s why many people choose to appoint an independent Trust Administration Service like ours
Click here to read more about how our Professional Trustee Solicitors can help you
Succession planning is no easy feat. It requires forward planning and careful management to ensure a smooth transition. Furthermore, it is not a one-off event but an ongoing process that evolves with your business and family. Your commercial aims can change over time, as can your personal needs and those of your family, so the succession plan that’s right for you today may not be so in 10 years’ time. For example, your family may have grown through marriage or with the arrival of grandchildren, bringing with them new ideas and fresh talent.
Our succession lawyers are on hand to help you navigate the legal and practical challenges of succession planning, estate planning and family wealth management. They provide dynamic, straightforward advice tailored to your individual situation and needs. Drawing on their considerable expertise and experience, they will assist you in making and executing the decisions that will ensure your business continues to thrive and safeguard your legacy for generations to come.
FAQ’s
What are the five 5 critical steps of a succession plan?
Creating a sound succession plan is crucial if you want to pass on your wealth and protect your assets.
The 5 critical steps of a succession plan are:
• Take stock of your assets and liabilities – make sure that you know exactly what you have, and decide who you want to inherit, when you would like them to inherit and whether you want them to benefit from a trust or own assets outright
• Take legal advice from an expert succession lawyer – this is a complex area of law with many options. You need to ensure you have the right solutions for your unique circumstances
• Discuss your plans with your beneficiaries – ensuring your loved ones know what your wishes are and why you want this to happen can help avoid misunderstandings and disputes in the future
• Work with your beneficiaries to prepare them – if you are passing on business interests, put a plan in place to show them the ropes so that when the time comes, they can transition easily to their new role
• Your lawyer puts in place the legal documentation – this forms the legal framework of your plan and can include a Will, Lasting Power of Attorney and trust deeds
Who benefits from succession planning?
Succession planning is particularly recommended for individuals with business interests or a range of investments.
It can benefit you during your lifetime by structuring your affairs in the most tax-efficient way and minimising liabilities. It can also help you to work with your beneficiaries so that they know how to take over when the time comes.
Succession planning also benefits those left behind. It can ensure a seamless transfer and may save substantial sums of money. It can prevent stress and legal difficulties and reduce the risk of disputes between family members.
When should succession planning begin?
Succession planning should never be left too late. Putting a plan in place straightaway can have the following advantages:
• Understanding what assets you have and how to protect them
• Discovering any areas that need your attention, such as business interests that you may need to streamline
• Preparing the next generation so that they have the ability to take over when the time comes
• Tax efficiency
• Focus and understanding of the way in which you need to keep your interests structured
• Having the right documents in place now to minimise risk and liabilities
• Once the plan is in place, it is easy to carry out a regular review and tweak as necessary
• The peace of mind of knowing that you have done all you can for your loved ones
