Many business owners often focus on growth and achieving the day-to-day operational demands of their business, failing to recognise the importance of what happens when they are no longer there to lead it. Business succession planning involves identifying successors and preparing for the transfer of leadership and ownership of your business when you retire or cannot continue management.

According to the National Association of Corporate Directors, less than one in four private business owners have a formal succession plan in place. Following recent changes to inheritance tax for businesses in the Autumn Budget 2024, it is a good time to start planning for the long-term survival of your business. A strategic succession plan not only helps to ensure continuity of your company, but will also drive growth, reduce tax and facilitate your retirement.

Wills

Putting a Will in place is the simplest, yet arguably the most important, method of succession planning allowing you legally define the succession of your business. Through a carefully drafted Will, you can specify how you want your assets, including your business, to be distributed on your death. You can choose entrusted executors in your Will who will be responsible for managing and distributing your business assets according to your wishes. You can also include a trust in your Will that will protect your business if you have beneficiaries who are minor and cannot manage finances themselves.

Lasting Powers of Attorney (LPA)

An LPA is another important consideration for business owners which allows you to appoint a trusted individual to manage your financial and business affairs should you lack capacity or are physically unable to do so.

The consequences for you and your business when you do not have a properly executed LPA in place are wide-ranging, particularly for sole business owners. Without an LPA, a costly court application will be required to appoint a Deputy to act on your behalf, who may not understand or carry out your wishes. While partnership agreements may address lack of capacity, an LPA offers a more comprehensive solution by managing all your personal financial matters and providing greater legal protection.

Tax Planning

Recent changes in the Autumn Budget 2024 have capped Business Relief against inheritance tax up to the value of £1million, with any value exceeding such cap being taxed at the rate of 20%. Lifetime gifts and charitable contributions that are appropriately timed and structured can lock in the favourable Business Relief regime and enable transfer of your business to be managed in the most tax efficient way.

Overall, a strategic, long-term approach to business succession planning should be an integral part of your business strategy and operation. Planning ahead will safeguard long-term success of your business and protect your business assets. By seeking further legal advice from our team, we can help you with all aspects of succession planning for your business when it comes to making a Will and Lasting Power of Attorney.

For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk

If you and your sibling have both been appointed as attorneys in a Lasting Power of Attorney (LPA), you may wonder how this will work in practice. In this blog I will explain the roles and responsibilities you both have as attorneys and what you can do should an issue arise between you. 

Your role and responsibility as an attorney

Being appointed to act as an attorney for someone is a serious responsibility. In choosing you to act, the donor likely felt you are a trusted individual who can take on the responsibility necessary for their future health and financial decisions. They likely believe you will make decisions in their best interests for when they become unable to.

Acting jointly as an attorney  

When acting jointly with your sibling as attorneys, your roles and responsibilities are similar to those of a sole attorney, but with some additional considerations due to the shared responsibility. Here are some key aspects of your role:-

1. You must work closely with your sibling to make decisions in the best interests of the donor.
2.  Strive to reach a consensus on decisions whenever possible. This may involve discussions, negotiations, and compromise to find solutions that align with the donor’s wishes and needs.
3. Hold each other accountable for fulfilling your duties and responsibilities as attorneys, including keeping accurate records, managing the donor’s affairs responsibly and avoiding any conflict of interest.
4.  Inform each other of any significant decisions or actions regarding the LPA. Regular communication ensures transparency and helps prevent misunderstandings.
5. Consult with each other as well as the donor if possible, when faced with important decisions or situations that may impact the donors welfare or interests.
6.  Ensure all actions taken by you both comply with the law, regulations, and the terms of the LPA.

By working together effectively and fulfilling your duties conscientiously, you can ensure that the donor’s best interests are prioritised and that their affairs are managed responsibly and ethically.

What happens if we cannot agree?

Conflict resolution

In the event that you and your sibling have disagreements, the following options are available to you when trying to resolve disputes:

1. Reaching an agreement: the first step would be to openly communicate with one another and express your concerns and try to reach a compromise.
2.  Obtaining legal advice: seeking legal advice from an experienced solicitor could help provide clarity on your rights and options. They can review the LPA document, assess the situation and offer guidance as to the best course of action.

Applying to the Court of Protection: if the disagreement is still ongoing and cannot be resolved through negotiation or obtaining legal advice, then applying to the court for intervention might be the alternative. The court can make decisions regarding the LPAs, including appointing replacement attorneys and providing guidance on specific issues.

Summary

Every dispute is different and depending on the circumstances, one dispute might take a different approach to another.

Obtaining legal advice may be a good option for you as it will provide clarity on your options and will not escalate matters too much.

Our Wills, Trusts and Probate team or our Litigation and Dispute Resolution team can advise you on next steps. Please give us a call on 01908 660966 or 01604 828282 or email info@franklins-sols.co.uk.