When It Comes To Succession Planning, There Is No Right Or Wrong Answer
One of the most important and difficult decisions any family business will have to make is how best to pass the business on to the next generation. Tax bills and a fair split of the assets are the two areas that we find most clients struggle with, and the decision can be made even more difficult if some family members are actively involved in the business and others are not.
It is important to remember that no family situation is the same, what is seen as a fair split up of the assets to one person may not be seen to be fair by another. This is the first major hurdle that most families must overcome when looking at succession planning.
Succession planning can prepare your wishes for the division of your assets during your lifetime or on death, and help to avoid large tax bills for your family. For example, if you want to allow a farming child to continue to run the business, you need to consider how to provide for the non-farming children. Given the value of farmland this might mean that the value of assets that each child receives may be vastly different, however we need to remember that there is only value in land if it is sold and a cash legacy to a non-farming child now may be just as valuable to them.
If we then consider Scots law, and the various legal rights obligations that were mentioned in our previous article, coming to a decision on succession planning can be difficult!
It is however very important, and the action of ‘burying your head in the sand and hoping for the best’ will only lead to more difficulties, more tax to pay and potentially more family fall outs in the future.
The earlier you speak with your accountant, the earlier the issues can be addressed and solutions found. If you would like more information on the distribution of your assets or if you would like to discuss any succession planning issues, please contact the Private Client Taxperts.
Alternatively, if you would like support with your agricultural business, please contact a member of our EQ Agriculture team via [email protected] or call 01307 474274 / 01334 654044.