Most Family Businesses are not run by sole traders which means that a Will alone does not deal adequately, or at all, with a Family Business. If the Family Business is run through a company, a Will can deal with the shares in the company but cannot direct what the new shareholders do with the Family Business. If the Family Business is run through a discretionary trust, then a Will alone cannot deal with that business. Your Will may be able to deal with the control of the trust (be appointing a successor trustee or giving the shares in a corporate trustee), but your Will won’t be able to dictate who gets benefits and distributions from the trust (e.g. the Family Business profits).
Personal estate planning is more than just a Will and deciding who gets what when you pass away. It is often prudent to deal with Family Business Succession separately from your personal estate planning. You may wish to deal with the succession during your lifetime and deal with what happens if you are alive but have lost capacity.
At the outset, it is important to understand how you own your assets and it is prudent to have an audit of your entities undertaken to clearly understand where all assets and control lie. Your Family Business may not own the land on which it operates but that land might be essential to the operation of the business. Once an audit has been undertaken and your objectives understood, then comes the time for advice on the best (including most commercial) way to achieve your desired outcomes.
After the audit thorough estate and succession plans can be formulated encompassing all assets in which you have an interest, including your Family Business, taking account of your individual priorities and objectives.
Thorough and appropriately documented estate and succession plans should result in a reduction of the time and cost to administer your estate, relieve your family of undue stress, and facilitate a smooth transition for the Family Business to the next generation and beyond.
You may wish to complete our online questionnaire (you can click here) which will get you thinking about where your assets are held and give you a head start for your first consultation with one of our estate planning lawyers.
By Kate Donnan – Accredited Advisor with Family Business Association
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