Most family businesses are operated within complex structures such as family trusts or companies and often a combination of these.
Many of these structures were put in place as a result of past Federal and State death and gift duties (taxes) which have since been abolished. At that time these family structures provided protection from these duties and also provided potential tax benefits to the family business.
More recently they provide potential tax benefits and other important benefits such as asset protection for key family members in the business.
Lately, there has also been rapid growth in the use of self-managed super funds (SMSF) for family investments.
The effect of this is that, apart from the family home, most of a business owner’s assets are now owned “out of the Will” instead of “in the Will”. That is to say, most family business and investment assets are held either in family trusts, family companies or SMSF’s. They are not in the personal names of the associated family members. They are not assets that can be readily passed on by a Will.
Therefore, managing the succession of a business owner’s assets or planning for an untimely accident or illness can frustrate and complicate the operation of the business.
Some questions that might arise for you, as a business owner, to assist in the smooth operation of your business and the passing of your estate, should an untimely event occur, include:
- Does a “straight forward” Will make provision for family business and investment structures held by family trusts, family companies or SMSF’s?
- Do you have a business plan so that, in the event of accident or illness, business decisions are carried out by the appropriate people?
- Does that business plan contemplate who the new directors of your family company or trustees of your family trust should be?
- Does your business plan cater for a smooth transfer of business assets in a fashion that is fair and reasonable to all family members and avoid potential conflicts down the track?
The successful structuring of inter-generational wealth transfers and succession arrangements need experienced advisors who have the skills, experience and resources to deal with a full range of issues for you and your business.
If you have any questions relating to the above, or questions surrounding your own family business structure, please do not hesitate to contact elringtons:
p: 02 6206 1300 | e: firstname.lastname@example.org