After an initial telephone consultation with the clients and having conducted a review of their existing Wills and business provisions, I identified many areas of concern that had not previously been addressed. I emailed them a summary of my understanding of their current situation, my recommendations to update things and the corresponding pricing to do it for them. We met for a full meeting a couple of weeks later, before which I sent them a list of ‘things to consider and prepare’ for the meeting.

The clients were married, with two children aged 20 and 18, four properties and a very successful family business. The husband and wife were the sole shareholders in the business, but were looking to reward five members of staff by giving them shares. The husband ran the business, the wife was not involved in it.

Their older child worked in the business at a junior level, while the younger child had no interest in doing so. The client’s net personal assets ran into many £millions excluding the value of the business (which should pass free of inheritance tax) and their vast sums of life insurance (which would pass outside their Wills).

Very little provision for reducing Inheritance Tax (IHT)

The clients existing Wills were Standard Mirror Wills, leaving everything to the survivor and then to their children equally on 2^nd death. They contained no provisions to protect the deceased’s assets from unintended third parties (such as the survivor’s remarriage or care fees) and no provision at all to ensure the continuity of the family business during or after the Probate process – which typically takes around 12 months. The value of their estate was too high to qualify for any of the additional ‘Residence Nil Rate Band’ (RNRB) relief from inheritance tax (IHT), however there were no IHT reducing provisions in their existing Wills.

No protection of the business in the event of losing mental capacity

They had no Lasting Powers of Attorney (LPAs) in place to protect either their personal assets or their business in the event of either of them losing mental capacity. Nor were their Life Insurance policies set up to pay into a Trust, so this would add to the survivor’s estate on 2^nd death and increase the value for IHT calculations. Their Company Shareholder Agreement made no provision for an Attorney under an LPA to make decisions for a mentally incapacitated shareholder, and included ‘pre-emption rights’ on death, which would mean the shares were immediately ‘up for sale’ at the time of death so would lose their Business Relief from IHT.

The solution I put in place for the clients to ensure their Will and company documents were fit for purpose included:

• Working with their Accountant, Finance Director and Commercial Solicitor to update their Shareholder Agreement; adding powers for an Attorney under a Business LPA to make decisions for an incapacitated shareholder, removing the pre-emption rights in favour of a ‘cross-option’ to secure the available Business Relief from IHT on death, and protecting the company’s interest in relation to the new minority shareholdings in the event the relevant new shareholder leaves the company or dies.
• Drafting and registering a pair of LPAs, both ‘property & finance’ and ‘health & welfare’ for husband and wife, along with specific business ‘property & finance’ LPAs for them and the five new shareholders.
• Redrafting their Wills to include several Trusts for ‘IHT reduction’ purposes (as they will never qualify for the RNRB), and for asset preservation purposes (so their assets end up with their children not unintended third parties), adding a Business Trust to hold half the company shares on 2^nddeath, to provide for the younger child who does not work in the business (this ensures this child does not have any voting rights, and the shares aren’t at risk from their unintended third parties or wish to sell).
• Working with their Financial Advisor to ensure their multiple Life Insurance policies will pay out ‘into trust’ not into the survivor’s estate.
• Checking the Land Registry Titles for each of their properties and severing the ‘joint tenancies’ to ‘tenancy in common’ so the Trusts in their Wills will be effective.
• Drafting robust Expression of Wishes Letters to explain everything that has been done, in plain English not legal jargon, so their Executors and Trustees know exactly what needs to be done on each death.

The client was extremely pleased and reassured with everything I achieved for them and left me a glowing 5* review, and regularly refers to me for other estate planning advice as a ‘trusted advisor’.