Business Ownership

Business Owners and estate planning

If You Own A Business, You Own An Asset!

If you are a business owner, it's crucial to understand that your business can be considered an asset in terms of inheritance tax relief. This can have significant implications for your estate planning and the inheritance you leave behind for your loved ones.

Inheritance tax relief can be claimed on the value of your business if certain conditions are met. To qualify for relief, your business must be actively trading at the time of your death, and at least 50% of its value must come from trading assets, such as machinery or stock. Additionally, the business must have been held for a minimum of two years preceding your death.

The relief available is known as Business Relief or Business Property Relief, and it can provide a significant reduction in the inheritance tax liability of your estate. Qualifying businesses can benefit from up to 100% relief, meaning that no inheritance tax will be payable on the value of the business.

This relief can make a huge difference in terms of the inheritance your loved ones will receive, as it can help to preserve the value of your business for future generations. However, it's important to seek professional advice to ensure that your business is structured correctly to qualify for the relief available.

In conclusion, owning a business can provide significant inheritance tax benefits if structured correctly. By understanding the rules and seeking professional advice, you can ensure that your business forms a valuable part of your estate planning and provides a secure future for your loved ones.

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A Note About Business Succession

Besides the inheritance tax advantages of running a business, what about the aspect of actually passing on a legacy to the future generation?

Business Succession is extremely important for any business owner. It is the process of transferring control and ownership of a business from one person to another. This could involve selling or gifting your business, passing it down to family members, or setting up a trust or other structure. With proper planning and execution, Business Succession can help ensure that your hard work and investment are preserved for generations.

Even if the family decide they do not want any further part in the business, with careful succession planning and operating under the premise of Flexibility rather than certainty in your Estate Planning, your family could decide to sell their share and decide to enjoy the proceeds instead.

Here at ONCE Wills and Trusts, we encourage you, as a business owner to discuss your options so you can make an informed choice as to how you want to provide for and to protect your loved ones.

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