How to deal with
This presentation is the property of its rightful owner.
Sponsored Links
1 / 17

How to deal with Business & Agricultural Assets in the Will PowerPoint PPT Presentation


  • 101 Views
  • Uploaded on
  • Presentation posted in: General

How to deal with Business & Agricultural Assets in the Will. Or... Protecting Business Assets coordinated with the personal ‘Death Planning’ solutions. Protecting Business Assets - Problem. Mr. Mrs. Excess Residue. Will. In wife’s estate Attackable by Divorce, Creditors, IHT etc. ?.

Download Presentation

How to deal with Business & Agricultural Assets in the Will

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


How to deal with business agricultural assets in the will

How to deal with

Business & Agricultural Assets in the Will


Or protecting business assets coordinated with the personal death planning solutions

Or...Protecting Business Assetscoordinated with the personal ‘Death Planning’ solutions.


How to deal with business agricultural assets in the will

Protecting Business Assets - Problem

Mr

Mrs

Excess Residue

Will

In wife’s estateAttackable by Divorce, Creditors, IHT etc.

?

Legacy up to NRB

Family Trust(Discretionary)

Where are the Business / Agricultural Assets going?

Family TrustIIP Trust

?

£325k (NRB)

Value = £750k

+ £750k

= £1.075m

PERIODIC & EXIT CHARGES!


How to deal with business agricultural assets in the will

Protecting Business Assets - Solution

Mr

Will

Value = £750k

Legacy up to NRB

Excess Residue

Family Business Trust 1

Family Business Trust 3

Family Business Trust 2

Family Trust(Discretionary)

£250k

£250k

£250k

£125k

£125k

£125k

Family TrustIIP Trust

Family Business Trust 4

Family Business Trust 6

Family Business Trust 5

If business expected to grow may use more trusts

£125k

£125k

£125k


How to deal with business agricultural assets in the will

Then in addition consider Cross Option Agreement


Company wills

Company Wills

NO PLANNING IN PLACE

ABC Ltd

Director B

Director A

50%

50%

Worse still...

…What if no will at all?

Director A’s estate will be subject to Intestacy Law...

…who will then be entitled to 50% of ABC Ltd?

Will


Consequences of no company will

Consequences of no Company Will

Consequences to Director A’s beneficiaries

Does spouse want to own and run co.? If so with Director B?

Risk from claims from remarriage, bankruptcy and/ or LTC.

Spouse assets increase by sale proceeds if sells inherited share. IHT liability?

Consequences to Director B

Has no call on deceased share

Does he have the funds to purchase?

Impact of deceased death on business. Uncertain future.

What now the value of his share?

His assets increase if sells his share and subsequent impacted by IHT.


Company wills1

Company Wills

STANDARD COMPANY WILL IN PLACE

ABC Ltd

Director A

Director B

50%

50%

100% share

LA Policy

LA Policy

LA Proceeds

CROSS OPTION AGREEMENT EXECUTED

Will

Will

50% Share


Consequences of standard company wil l

Consequences of standard Company Will

Consequences to Director A’s beneficiaries

The ABC Ltd share will pass to spouse through his will. This is now part of her estate.

Whilst share held IHT exempt as qualifies for BPR. On Cross Option no BPR applicable on proceeds.

Spouse assessable assets for IHT now increases by Life Assurance Funds

Risk from claims from remarriage, bankruptcy and/ or LTC. She could potentially lose 40% of cash proceeds from Life Assurance plan to taxman thorough IHT

Consequences to Director B

Will own ABC Ltd 100%.

Whilst trading BPR applicable

However his assets increase if sells his share and subsequent impacts his IHT – He could potentially lose 40% of cash proceeds from sale to taxman thorough IHT.


Example

Example

So

combined IHT liability

paid of…

…£1,080,000

Director A

Director B

ABC Ltd

£1.8m

Unnecessary additional

IHT liability

of…

… £360,000

Unnecessary additional

IHT liability

of…

… £720,000

CROSS OPTION AGREEMENT EXECUTED

£900,000 Life Assurance proceeds

Director B decides to sell ABC Ltd for £1.8m.

This now fully part of his estate.

Director A spouse


Company will s

Company Wills

COUNTRYWIDE COMPANY WILL PLANNING IN PLACE

Director A

ABC Ltd

Director B

50%

50%

Will

Will

CROSS OPTION AGREEMENT EXECUTED

ABC Ltd Countrywide Shareholder Trust

Dir. A Countrywide Family Trust

Dir. B Countrywide Family Trust

LA Proceeds

Dir. B LA Policy

50% Share

Dir. A LA Policy


Advantages of countrywide company will plan ning

Advantages of Countrywide Company Will Planning

Advantages to Director A’s beneficiaries

The ABC Ltd share will now pass to Director A’s Family Trust through his Will.

Once the Cross Option has taken place, the cash proceeds from the life assurance plan are now part of Director A’s Family Trust, not the Spouse’s estate.

These funds are now protected and cannot be assessed against anyone for IHT purposes.

The funds are now also protected from the risk of claims from remarriage, bankruptcy and LTC and can give Director A the peace of mind that his assets will go to who he intended.


Advantages of countrywide company will planning

Advantages of Countrywide Company Will Planning

Advantages to Director B

Director B still owns 50% of the company and the other 50% is owned by the Shareholder Trust.

If Director B now wishes to sell the business, only 50% of the sale proceeds will enter his estate and the other 50% will belong to the trust.

The 50% owned by the trust are protected and cannot be assessed against Director B for IHT purposes.

If the business is sold, the trust funds are also protected from the risk of claims from remarriage, bankruptcy and LTC.

Half of any dividends paid would be to the Shareholder Trust. These can be distributed to beneficiaries in the trust so can be used as an income tax planning tool.


Example1

Example


How to deal with business agricultural assets in the will

ABC Ltd

£1.8m

Director A

50% of ABC Ltd

in Trust

Director B share of ABC Ltd

Director B

Additional

IHT liability

of…

… £0!

£900,000 Life Assurance proceeds

IHT liability

of…

… £360,000

CROSS OPTION AGREEMENT EXECUTED

Director B decides to sell ABC Ltd for £1.8m.

50% of proceeds protected in Trust.

50% in Director B estate

Director A Family Trust Suite


How to deal with business agricultural assets in the will

..in comparison to £1,080,000.

A saving of £720,000

with the use of

Countrywide Trusts


How to deal with business agricultural assets in the will

…and dependent on

circumstances

and appropriate planning the

£360,000 IHT liability for

Director B

could be negated fully


  • Login