LIVE 24-SEVEN
HARRISON CLARK RICKERBYS RETAINING FAMILY WEALTH
I’m not usually surprised to hear that for most of my clients their primary objective is to preserve their estates for their families after they have died. A recent survey by Time magazine highlighted that 70% of wealthy families lose their wealth by the second generation and a stunning 90% by the third.
Social and economic factors no doubt contribute to this dramatic decline and whilst everyone’s personal and financial circumstances are different, there are ways in which you are able to protect your family wealth both from, and for, future generations.
Traditionally, trusts have been widely used not only to reduce exposure to inheritance tax but also to protect wealth in a variety of circumstances such as funding school fees or protecting assets for disabled beneficiaries and for those who are simply too young to manage assets themselves.
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For some families, however, trusts are just too restrictive and in recent years we have seen more and more clients looking for alternative more flexible solutions.
Given the current relatively low rates of corporation tax in the UK, a Family Investment Company (FIC) may be a lower cost and more flexible proposition. A FIC is usually a new company set up to hold cash, investments or property where income and gains can be accumulated.
A typical FIC structure begins with parents making an interest free loan to the company. In return, the parents receive voting shares and are appointed directors. Other classes of shares are issued to family members who then enter into a shareholders agreement to regulate their ownership of the company. Through the voting shares, the parents retain some control over who receives what and when. This is an essential tool for those who want to prevent family wealth being frittered away.
One size doesn’t fit all of course and each FIC arrangement is bespoke to you and your particular circumstances.
If you have questions about FICs, the use of trusts or your estate planning options contact us by going online at
www.hcrlaw.com or calling me on 07896 891 284.
Harrison Clark Rickerbys Solicitors, Cheltenham: 01242 224 422
Worcester: 01905 612 001
www.hcrlaw.com
I Hereford: 01432 349 670 I Wye Valley: 01989 562 377
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