Advice to Business Owners
Commercial clients are emotionally and financially invested in their business, whether it’s a start-up or has been trading for years.
A great deal of effort goes into ensuring that it is compliant, meets service levels, there is sufficient cashflow and that it achieves its financial potential.
As well as trying to meet their own aspirations, business owners have stakeholders – the bank, shareholders or co-owners, clients. However, a surprising number of business people have not put in place provision for their incapacity or death.
If you are instrumental to the running of the business, can it continue to trade if you are incapacitated? Do you have a power of attorney in place, specific to your business? You may well have a power of attorney, but if this was prepared with regard to your personal finances, is your choice of attorney still appropriate to the needs of your business? Often, the answer is no, perhaps due to a lack of expertise or, indeed, time that can be given over to the business.
And what happens if you die as a business owner? In the event of your death, there may be only a short window to harness the value of your goodwill and effect a sale for the benefit of your beneficiaries.
If the business is to continue, how will any co-owners, shareholders or employees react to beneficiaries of your estate perhaps being entitled to a share of the company and its decision making? In some companies, an inheritance can tip the voting majority and lead to changes in the future direction of the business.
Maybe it would suit you and your co-owners to have a formal arrangement in place which sets out how the business will operate? You and your co-owners may also wish for the business to ‘buy out’ any beneficiaries so as to avoid third parties gaining an element of ownership. In such a case, have you considered how this might be financed?
From a personal perspective, you may also be interested in mitigating inheritance tax and seeking ways to allow your children to take over, whilst still providing for a spouse or partner.
As with any disaster recovery planning, an holistic approach is required in order to provide comfort to business owners and their stakeholders, whether they be family, colleagues, banks or clients. Cognitive Law appreciates that adding to the ‘to-do’ list is not always appealing, especially when there is a business to run. However, there should always be a Plan B and we will be happy to guide you through the best and most appropriate options.
Cognitive Law’s lawyers have expertise in the preparation of wills, personal wealth and tax management and mental incapacity as well as corporate and commercial work. We offer pragmatic and commercial advice, best suited to you and your business.
For more information please contact Richard Bates on 01273 284012 or email firstname.lastname@example.org