People looking to protect the longevity of their family-run businesses should think seriously about the merits of putting in place a Discretionary Trust (whether in lifetime or under a will) according to advice from Latimer Hinks.
The law firm has issued the advice following an increase in the number of older clients enquiring about how they can protect the future of their family-run businesses when handing over the management reins to the next generation.
Anne Elliott said: “We are seeing more and more people wishing to make sure that businesses they have set up, nurtured and taken forward are passed on for the benefit of family members and indeed the employees and other key players working in the business and that any wealth they pass on is used sensibly. Usually this has a caring motive, with parents and grandparents wanting to instil in future generations, for their own good, a strong work ethic but also there is the wish to ensure protection of the legacy of the family business.
“Trusts can ensure that family wealth can be protected in the event of premature death or during divorce as the shares or partnership interest are held by the Trustees, rather than individual family members or employees.
“Use of Discretionary Trusts inevitably involves professional advice, charges and costs – but so often this is insignificant as against the security provided to both older and younger generations, anxious to secure the family capital and income source.”