As part of the Tatler SOS Experts’ Corner, we delve into the tricky waters of trust and inheritance. Here Camilla Wallace from Wedlake Bell LLP weighs in on what to do ahead of signing on the dotted line.
The first couple of questions to ask yourself will be: ‘how’s the family business doing at the moment? and, do you want to be actively involved?’ If the pandemic has been less than kind and the post-pandemic world doesn’t suit the business case then you might want to cut and run and sell out to other family members or outside shareholders.
However on the basis that the business is faring well then, do you see yourself as a silent investor on the sidelines or as someone more actively involved who requires perhaps a Board seat? The answer to that will define your remuneration but also how you engage with the business and the rights that you might retain – which might be written in law or via a shareholders’ agreement and/or some form of employment contract.
There might even be a family business constitution that you are asked to sign up to. Although the latter are not usually binding, it will be essential to have some professional advice on all the documentation that you will be entering into.
Life insurance might be something to consider depending on what arrangements the business already has in place and also what type of business the family are in – investment or trading.
You will also have to consider how you want to own your stake and whether there is any scope to tax plan for the next generation now using trusts (prior to your inheritance kicking in) or mitigate your own personal tax exposure to the dividends if they are paid out.
If you don’t have a Will now is the time to put one in place and the same goes for Lasting Powers of Attorney (LPA) – who is going to manage your affairs if you lose capacity? Without formally nominating someone now there might be a dispute between trusted partners and family members over whom should be appointed your Deputy (with influence over the family business) and the associated application to the Court of Protection takes time and the fees can be high. You could even have a separate LPA specifically limited to dealing with your business affairs.
Are you in a partnership/married? Do you need to think about putting a pre or post nuptial or cohabitation agreement in place to protect your inheritance of the family business as much as possible?
It will be crucial to talk to the current business owners and managers about what the future plans are for the business: growth, sale, IPO/listing, new jurisdictions and how you play into all of that.
If after all of that you are feeling that you might lack the experience or business nous to take an active role – do not be deterred. “Next Gen” fresh eyes can help shed new light on traditional business methods and can help take the business forward. There are excellent business and personal coaches out there to help you reach the entrepreneurial potential you never knew you had; you could even offer to lead a new project for the business on current topics such as sustainability or social responsibility and engage/raise personal and business profile that way.
In short it will be a case of taking professional advice when you need it (such as tax and legal) and having the confidence to embrace this next step in your journey.