Because business is personal
PUBLISHED: 15:56 11 August 2016 | UPDATED: 15:56 11 August 2016
Clint Randall - pixel pr phototography
Scratch the surface of every owner-managed business and there'll be a tangle of very personal considerations to take into account, according to BPE's team of expertly nimble knot-unpicking lawyers.
BPE has developed its ‘Corporate Will’ service to give clients the confidence that their business, family and personal interests are aligned, protected and ready to withstand the slings and arrows of outrageous fortune.
Not just about the top job
Succession planning is an important topic for any business seeking longevity, but it’s easily pushed down the ‘to do’ list for a busy and active owner-manager with every intention of staying put for the foreseeable future.
Two limitations of such an outlook are worth considering.
First, how much of our future is foreseeable? This summer threw a few curve balls at the notion of predictability on a pretty large scale, never mind the realities closer to home as our health changes, families grow and relationships shift. The priorities you had today, or yesterday, may not be the same tomorrow. In short, it’s never too soon to have a plan; make one and update it periodically.
Second, succession is not just about planning who will step in to your leadership role when you choose to stop. If the proverbial bus hits you tomorrow, what happens to your shares? Then ask that question of any other shareholder; the ones who are active in the business and know it inside out, and the ones who may have been gifted or assigned shares as spouses, children, loyal friends who helped you get started…
“Just as your Personal Will documents what happens to your personal estate when you die, you also need to consider what happens to your business interests,” explains BPE Partner Clare Young.
“All shareholders should think about a Corporate Will to look at protecting those business interests for preferred beneficiaries and ensuring the right people make decisions on your behalf if you are out of action for whatever reason.”
The Corporate Will service is broken down into two phases – review and recommendations. The initial review stage will assess shareholder agreements and review what protection mechanisms are in place, while phase two will suggest ways in which to strengthen the overall position. This may include restructuring if it is beneficial to the business and drafting Powers of Attorney for decision-making processes, both corporate and personal. This ensures that your business interests are protected should you lose the capacity to make decisions yourself, and your wishes and intentions for the future of the business are clearly defined.
Tales of the unexpected
In family businesses there can be an assumption that ownership and responsibility for the ongoing concerns of a business automatically revert to the surviving family member, or the senior management team, if the lead owner-manager dies. A personal will rarely stipulates such matters, which is why it is worth covering all the bases. BPE’s corporate team will ensure all the details are clearly noted and there is no doubt as to what happens should the unthinkable occur.
But Corporate Wills are about life, not just death. Unexpected twists can bring divorce, new co-habiting relationships, elderly parents requiring care or grown up children getting married (or divorced). All these events can affect people that we love and want to support financially.
“It’s not uncommon for clients to have made a personal Will many years ago and not updated it despite their changes in circumstance,” says Clare. “And when we start to talk about their business interests, it dawns on them that they’ve assigned shares to partners who are now estranged, or a child who has married and might have re-assigned a shareholding to their spouse.
“Undoing these kinds of knotty tangles is certainly achievable with the expertise we can draw upon across our corporate and private client law teams, but it’s even better if we can encourage people to put the right clarity and protection in place to start with.”
A Corporate Will can be shaped to cover all eventualities, and establish the correct Powers of Attorney, succession plans, plan for inheritance tax and provide insurance options to allow the buyback of shares on the death of an owner. It can also provide protection in respect of a divorce or separation, and lay out plans for properties owned by the business.
“Owning and running a business is not an easy task. There are always a dozen things needing your attention, no matter how much you delegate, and we understand that. We make it our business to know your business, and we’ve planned this service to make life a little more straightforward.
“By protecting your business and its assets, you can ensure that they work for you as much as you work for your business. Sadly in this life, things happen that are unexpected. Relationships break down, accidents happen and illness can strike at any point. By protecting your business interests you can help to ensure the security both of your business and of your loved ones.”