OWNERS of businesses tend to lead busy lives, and thinking about legal and financial protection for the future is often sidelined – not just for the business but also for personal affairs.

It is commonplace to consider personal and business affairs as separate entities when in fact they are related.

Nobody likes to think about the worst, but we often see the consequences for a family and their business when the owner dies without having put proper plans in place.

This could be a number of scenarios whereby the shares in a business can suffer more inheritance tax than necessary or could even end up in the wrong hands. This can leave the surviving business owners having to run it alongside people who may have no interest in or skills relevant to the running of the company.

Such problems inspired Dickinson Dees to launch a Protecting Your Business service. This provides key shareholders an integrated legal, financial and tax package to help to minimise risks.

Many people think that the solution to problems with shares is to require the other business owners to buy the shares at a pre-agreed price. If this amounts to a binding contract on a shareholder’s death, it can eliminate business property relief with the resulting inheritance tax being 40% rather than zero.

Inheritance tax pitfalls can also be avoided whilst still ensuring that the surviving owners can buy out the share of the one who has died via combining option agreements with appropriate life insurance. The agreements set out the mechanism for a smooth transfer of shares and the life insurance provides the surviving shareholders with a tax-fee lump sum to buy the shares.

Key person insurance can be put in place to provide the funds for advertising and recruitment of a replacement in a business. It can also compensate the business for the loss of a key person.

To find out more about protecting your business, Dickinson Dees will be hosting a seminar on November 22.

To register online, visit www.dickinson-dees.com  or email events@dickinson-dees.com.

:: By Andrew Playle, a partner specialising in wealth management at Dickinson Dees