businesses

Tax planning for business and agricultural assets and AIM shares

Although Inheritance Tax may be avoided if you bequeath business or agricultural assets or AIM-listed share portfolio to a spouse, if these are sold during his or her lifetime, the proceeds become taxable. So your children or other beneficiaries may be obliged to hand over 40% of their inheritance to the government.

By including a Discretionary Trust in your Will, the surviving spouse and children can make use of the assets during their lifetime and are not subject to Inheritance Tax on the second person’s death. The Discretionary Trust can be used in conjunction with a Cross Option Agreement and other tax planning Trusts in your Will (e.g. the IOU Discretionary Will Trust).

Business succession planning

Cross Option Agreements protect surviving shareholders and partners in limited companies and partnerships by giving them the option to purchase or sell shares that have passed to the deceased person’s family or Discretionary Trust (as above). Insurance is taken out when the agreement is drawn up and written into a trust to guarantee funding.

Without a formal Partnership Agreement, a partnership is dissolved on the death of one of the partners. A comprehensive agreement enables the organisation to continue trading if one of the partners dies or decides to leave.