A matter of trust

Client Profile:

Type: Owner managed business

Sector: Services

Turnover: £45m

Personnel: 5 directors, 160 staff

Background:

In this family-owned company, only one of three children wishes to take on the business - the parents would like all the children to be treated fairly. The wealth is tied up in company shares and the family home.

Solution:

A four-part plan based on a lifetime gift of shares for the benefit of all three. Appropriate wills to be made for the client and his wife, to pass on their remaining shares to the children. The shares passed to the child who is going to be actively involved will go to him or her absolutely. And by setting up a Trust for the other two children, this will prevent them selling what would be a majority shareholding and forcing their sibling out of the business.

Outcome:

The family wealth passes to the next generation in a way that treats all three children equally, while minimising the tax liability. By moving the shares into Trust, control stays with the trustees while the dividends pass to the second generation.