Who has control of your shares when you’re gone?
This month’s article flows from a seminar that David Dees, our Corporate Partner and I have delivered twice so far this year. One of the aspects covered is so fundamental, I thought the following might help save someone….
I know people like me all say “make a Will”- but I also know it can be tough to take that step. However, if you are a business owner with a family and don’t have a Will you could be endangering the future of both.
When you die, your spouse will only take the first £250,000.00 of your assets and this includes the value of your company shares. Any balance remaining in your estate is divided in half. One half is held for your spouse on trust for life and the other half is for your children, but they get the right to control the assets at 18.
Shareholder meetings just got interesting then. In effect, you now have at least three shareholders of your original one holding- your spouse, their trust and the children’s trust. If one or more of the children are over 18, then they can turn up to meetings too, because they now own their shares personally. It may be that none of them has ever played a part in running the business, but now they think they should. How on earth is the business to get a decision past the shareholders now?
If you haven’t looked at a Will, you probably haven’t looked at the Articles or the Shareholder Agreement either (please get an agreement made if you don’t have one!). Both of these can affect how your shares are dealt with on your death and your family won’t get the outcome everyone expected if they aren’t set up correctly.
If the above isn’t quite you- because you are unmarried but live with someone, or your business is a partnership- then your situation is likely to be even less straightforward and you need more planning, not less.
Whatever the structure, take some advice and get some certainty into the situation. You plan for the success of the business now- plan for the future too.