Thursday, 25 September 2014

Family businesses and pre-emption rights: a trap for the unwary

Business owners are a notoriously busy lot.  Trying to get them to put wills in place can require persistence on the part of the adviser.  However, care is needed when making wills for business owners as getting the will in place, on its own, may not be enough.

Trouble can ensue when the share transfer provisions in the articles of the company, or any shareholders’ agreements, prevent the deceased’s shares being transferred to the heirs named in the will, or the trustees of any trusts in the will.  Restrictions placed on transfers are commonly called pre-emption rights. 

Thursday, 11 September 2014

Choosing trustees? Not so fast!

What is the key decision which repays very careful thought when setting up a trust or a will containing a trust?  Is it who can benefit from the trust (the beneficiaries)?  Of course, that is very important.  Or whether it is a fixed interest or a discretionary trust?  Absolutely, money in the right hands at the right time, naturally.  But I would argue that there is one matter that trumps even both of these.  No prizes for guessing (the clue is in the title!) – the No.1 spot has to go to choice of trustees.  Poor decision-making on this front can lead to big regrets all round as it is far from easy to force trustees to retire once they have accepted the position.  Read on if you require further persuasion.