The importance of business succession planning   What happens to a business if its owner or co-owner dies or falls seriously ill? Much will depend on the type of business – sole trader, partnership or limited company – but unless there has been some advance planning, the chances are that there will be disruption, arguments and the strong possibility that all or part of the business will end up in the wrong hands.

So if you’re a business owner, business succession planning and insurance is important. It’s quite simply the process of planning for what you want to happen if you (or your co-owner, if you have one) were to die or fall seriously ill.

The legal position on the death of a business owner will depend on the type of business entity.

When a sole trader dies, their business dies with them, legally speaking. The business’s assets will form part of the sole owner’s estate and pass on to beneficiaries under the terms of their will. If the owner has not made a will, the intestacy rules apply; in effect, the state lays down who the estate should pass to, and normal inheritance tax (IHT) rules apply.

However, the good news is that most trading businesses are not subject to IHT – if you’re unsure about yours, you should certainly take advice. If your business does not enjoy tax relief, the basic requirement is to create a capital sum, preferably outside the estate, in order to minimise IHT.

This could be achieved with the help of a suitable life insurance policy.

A partnership is a business owned by at least two people. Unless there’s some specific provision in the partnership agreement (and very many partnerships have no formal agreement), a partnership ceases when a partner dies. When that happens, the deceased partner’s estate becomes entitled to their share of the business.

This can mean a choice for the surviving partner or partners. They could pay the deceased partner’s estate a sum of money they all agree to be the value of the deceased partner’s share, or carry on in business together with the deceased partner’s spouse or other beneficiary – even if the new partner has little to contribute to the success of the business.

Effective succession planning provides some clarity in the event of death.  A double option agreement ensures the surviving partner(s) has the option to buy the share in the business from the deceased partner’s estate. The deceased partner’s estate can also exercise an option to force the surviving partner to buy. Under an automatic accrual arrangement, the surviving partner(s) inherits the business, but the family receives the proceeds of a life policy.

There may also be a need to insure the lives of all the partners to cover potential liabilities that might arise on their death – perhaps to pay off an overdraft or other creditors.

Limited companies continue after a shareholder’s death, but the basic succession issues are similar to those facing a partnership. The key is to make sure that the shares end up with the surviving shareholders and the deceased shareholder’s family receives some money.

Generally, the deceased shareholder’s beneficiaries will want financial compensation in return for their shares, assuming that they don’t plan to continue in the business; and there may also be the need to pay off creditors on an owner-director’s death.

A double, or cross, option agreement is often used for company shareholder succession planning. If a shareholder dies, their beneficiaries can require the remaining shareholders to buy them out or the remaining shareholders can require the beneficiaries to sell their shares.

To provide the funds, each shareholder should take out an ‘own life’ policy written under a special business trust to benefit the other shareholders.

Of course, it’s not just the death of a business owner that can stop a business. If a business owner suffers a critical illness, such as a heart attack or cancer, it may not be possible to continue in the business either temporarily or permanently.

Expert advice, taken before the event, could have helped in both of these cases. A suitable critical illness insurance policy is probably the best way to provide protection against the financial consequences of having a serious illness. These policies pay a cash lump sum on diagnosis of a specified critical illness or disability.

The policies are normally written in trust for the other business owners, along with an agreement between the business owners about the circumstances in which the share in the business should be transferred.

The death or critical illness of a business owner can lead to unexpected or undesirable consequences for those left behind. Taking the opportunity – well in advance of such an event happening – to plan for such a situation can help crystallise what you want to happen to your business after your death, and to identify how best to ensure that this will actually come about.

A good adviser will start by finding out the most important issues of their business owner clients and, once these have been identified and prioritised, they’ll recommend a suitable way forward.

To receive a complimentary guide covering Wealth Management, Retirement planning or Inheritance Tax planning, produced by St. James’s Place Wealth Management, contact Charlotte Poole-Graham on 07415855071, by email charlotte.poole-graham@sjpp.co.uk or visit www.charlottepoolegraham.co.uk

Local Treasure

Not knowing what to do on the Bank Holiday Sunday, we decided to search out some gardens I had heard mentioned, somewhere in Chepstow. My partner has very good knowledge of Chepstow using the Chepstow road network on a daily basis. Even so it still took us quite a while to search out Wyndcliffe Court Gardens, but when we finally arrived at our chosen destination......wow! It is a local treasure, but in my opinion under promoted and non existent signposting! It really is a hidden gem and the tearoom with tables on the patio is a pure delight to a tearoom fanatic such as myself. 

Having previously discussed tourism on the Tuesday evening at CAP, I felt that Wyndcliffe Court Gardens are just another example of how, we in the Forest and Wye Valley undersell ourselves. For anyone who hasn't visited this local treasure I highly recommend a visit on a bright dry sunny day. It is also a fine example of another local enterprise.

'Ode CAP Thursday Club' 

At six o’clock, the annoying sound
Of an alarm clock crashing to the ground,
I thrash around to mute the notes
And now it’s buried in my Totes!
My wife complains, I say with wit,
“I’ve already put a sock in it!”
It must be Thursday, joy of joys,
As I find the clock and kill the noise,
I’m off to CAP to hear Paul say,
“The best way to start your working day”.
As Paul decides who’ll take the floor,
Cecile the Books bursts through the door;
Her admin systems are the best
But late again she has a rest!
Every member talks in turn
That about their business we might learn;
Sharifa’s bow ties, Laura’s knitting
And Andy B with Ariel fitting.
There’s Grantly Rogers, Pet Supplies
And Tracy Ashford’s legal eyes.
Sharon’s there to sell your house
Megabyte Ben will clean your mouse.
A back passage that is shiny bright?
Dave Leopold will see you right.
Andrea sends you somewhere sunny
Whilst Charlotte P in on the money;
Andy tells of Graphics Shack
And Alison wants her Lemon back.
Photography? Please keep it local,
A point on which she’s very vocal!
No matter what you must insure
We have a Rev who knows the score.
To make the most of staff resources
With Karen Gane you should join forces;
Think you’re dyslexic, please don’t jest,
Kris Ventris Field will run a test.
Then Eric W says out loud,
“I’ll stick your data on a cloud”.
Power of Attorneys, protecting the weak?
Just contact Val if its help you seek
And should you need to advertise
Forest Jo will put you wise.
If your web traffic is to slow,
Andrew Callard’s in the know;
Nick Johnson is the mortgage king
Whist Ian does his social thing.
Want your kids to have a ball?
Paul’s Best Parteez does it all.
Who else is there for goodness sake?
Ah, Sarah Jones, she’ll bake a cake.
I guess that just leaves little me
Your friendly face from Leigh-on-Sea.

On Friday on #Radio4 three women were interviewed who very much wanted to have a family but were not able to. They all spoke candidly and heart rendingly of their journeys from assuming that of course they would become #pregnant to well perhaps later to finally when, as one woman expressed it, the "goddess of oestrogen finally leaves" with the menopause, and there is no chance of pregnancy to the social challenges of not having children or grandchildren in older life. There was even the difficulty of who do you leave your precious things to?

As a young woman one can lose friends with children because it is awkward to be childless; there is little in common when the friend is totally engaged in childcare and the pain of being childless is thrown into sharper comparison.

There seems to be a whole strata of women, largely silent in society, who struggle with this pain and sense of losing something that never was. How to express a grief over the loss of someone who has never been there? How to come to terms with a miscarriage of a much longed for baby or the termination of an ectopic pregnancy, when you thought you were, finally pregnant. Perhaps the general attitude can be rather heartless but well meaning - "I expect something wasn't quite right with it" is often said in the hope that that would be some comfort...

My heart goes out to you in deepest #empathy.

I wonder how many women have to bear this pain in silence all their lives?

At a recent meeting I was asked what #chakras were. My imagination of them is as follows: -

We are essentially energy Beings, with the slowest and densest energy manifesting as our physical bodies. As with all energy systems, ours needs replenishing to negate the effect of the #firstlawofthermodynamics. The more subtle, higher vibrations of the energy associated with our energy field are too much for our physical bodies in their natural state so therefore unavailable. The chakras, seven of them located at key points in the body, act as #transformers enabling the more rapid universal energies, which are connected to and surround our bodies - our #auras - to be utilised by our individual physical systems.

Stress, illness, even difficult emotions may interfere with this transformation and flow of energy, resulting in fatigue, feeling out of balance, even more stressed.

Meditation, walks in a calm natural environment in a wood or by the sea, generally a state of physical and mental #relaxation all facilitate the renewal of energy for our physical bodies to work optimally.

Many complementary therapies like #Reflexology, by inducing a state of relaxation, according to clients feedback, may facilitate the effective flow of energy through the chakras to the the physical body.

What is your imagination/idea of #chakras?