Back in September 2020, we reported on the ruling of the High Court regarding the disputed interpretations of sample policy wording of insurance cover for businesses. The Financial Conduct Authority...
If you’re reading this, you probably run a family business. At the very least, you will be thinking of starting one. You’ll know how exciting and rewarding an experience it can be, and also the unique challenges and pressures involved.
Family business owners and stakeholders are plate spinners – acutely aware of the need to balance the business and personal aspects of the relationships involved. Maintaining harmony and nurturing growth at the same time is not always easy. So, we’re here to help you keep those plates spinning.
Our teams provide tailored advice to family businesses of all sizes across a range of sectors. From our experience in supporting family businesses, we’ve developed a collaborative approach – working in partnership with you and collectively across our teams to ensure that we offer comprehensive legal solutions based on your objectives.
Ultimately, family businesses are all about being in it for the long haul; protecting your values, innovating and leaving a sustainable legacy for future generations. We feel the same about our relationship with you. We will always look to the long-term, identifying opportunities and risks, and helping you plan and review your business strategy accordingly. We hope to become an adopted member of your family that you can rely on whenever you need us.
Family owned businesses have been the cornerstone of our economy for decades and longevity is the hallmark of their success. Sound legal advice that takes account of the complex dynamics and bespoke needs involved is vital to help maintain their prosperity and family cohesion.
We aim to empower you by delivering practical and emotionally intelligent advice on a variety of issues, including governance and business structure, tax, succession planning, Trusts, employment contracts, property, remuneration, dispute resolution, commercial agreements, estate planning and prenuptial agreements. Here’s how:
Prenuptial agreements are increasingly respected by the Courts, provided they are deemed to be fair and logical, transparent in terms of their financial impact, not entered into under duress, and ultimately meet the parties’ needs on separation.
The Court is keen to preserve the financial success of a family business on divorce. Valuations of businesses in this context are generally undertaken to understand the financial liquidity and sustainable drawings of the business rather than to jeopardise its existence, something that is always the concern of a divorcing business owner.
Built to last
We appreciate the challenges faced by generational businesses and have a long history of acting for family owned, owner managed companies appreciating the challenges faced with more complex structuring from second generation onwards. Our experience of advising on complex structures allows us to reflect family dynamics and different roles of members. We can also help prepare businesses for generational handovers or ultimate sale to a third party when the time is right.
For a functioning business, continuity is key. Advising on and preparing shareholders’ agreements and partnership agreements is a fundamental part of our services for family owned businesses. This can play a part in the day to day running of the business and can also be delivered in conjunction with lifetime or estate planning for the future.
Working closely with our Lifetime Planning and Trust teams, our Company Commercial team create corporate structures known as Family Investment Companies [LINK TO PAGE]. These companies can house family wealth for the benefit of future generations requiring tailoring of the structure, share rights and governing articles of association to suit you and reflect your wishes in terms of control of the shares.
Dealing with the detail
We provide a comprehensive employment law service to a wide range of family businesses. This includes:
- Drafting and review of contracts of employment, staff handbooks etc. to ensure they are up-to-date, compliant and tailored to the specific needs of the business;
- Delivering day-to-day HR support on common workplace issues, including disciplinaries and grievances, staff absence, performance management, dealing with workplace conflicts, redundancies, discrimination and bullying/harassment;
- Training on aspects of employment and HR (including the above), either in-house or at their premises;
- Providing advice and representation in respect of any tribunal claims facing the business
Our BUCKLESprotect scheme offers varying levels of employment and HR cover for a monthly or annual fixed fee.
Talking it through
Disputes arise within all businesses, but disputes within family owned businesses have several unique challenges. The dynamic means that the operation of the business can severely impact personal relationships and vice versa.
Disputes often arise around succession issues when the next generation of the family begin to take a more prominent role or when ownership is transferred. Planning for succession is of key importance for a family business, but this cannot always eliminate the risk of conflict. Disputes can arise if there is a disagreement on future course of the business, which family members should work in the business, and how the rewards should be shared.
Our experience is that such disputes need to be addressed quickly, robustly and sensibly. If a dispute results in Court proceedings having to be issued, then the conflict tends to be long, costly and destructive. Irrespective of which side “comes out on top”, the process often has a bruising effect on the business and family relationships. We can assist you in settling a dispute early through negotiations, avoiding lengthy and expensive Court proceedings.
We have many years’ experience in dealing with disputes within family businesses and several of our lawyers are trained mediators. We can advise and represent you on Alternative Dispute Resolution processes such as mediation, conciliation, arbitration and early neutral evaluation. Ultimately, it’s important to achieve solutions that all parties buy-in to, allows the business to move on and preserves family relationships.
Examples of disputes that we have successfully resolved include:
- A trading company where one family member had operated the business without reference to other family members;
- A construction company inherited by siblings from their father, where the siblings had opposing views on the direction the company should take;
- A farming partnership where one family member wished to retire but there was a significant dispute as to the valuation of his share.
Protecting your future
Your family and business are unique. However, our experience in advising families and their businesses over the years has given us insight into the issues which tend to arise regularly. Let us help you to put the right structure in place for your family and wealth.
Trust Wills, sometimes referred to as ‘bloodline Wills’, can ensure that the inheritance you leave is safeguarded from future loss, as a result of:
- a surviving spouse or partner making a new Will or remarrying
- care home fees
- Inheritance Tax (IHT)
- divorce, bankruptcy or disability of a beneficiary
- claims against the estate (for example, from an excluded child)
Business Relief (BR) is an IHT relief available to shareholders in private limited trading companies. We can advise you on how to structure your Wills to make best use of any BR available to your estate, even in circumstances where the business is sold.
Family Investment Companies
A Family Investment Company (FIC) is a potentially tax efficient vehicle used for estate and IHT planning. A FIC is often an alternative to Trusts, since they enable significant wealth to be passed onto future generations whilst protecting and retaining control over the assets gifted.
School fee planning for grandchildren
Providing future generations with the best education possible – be that primary, secondary or tertiary – is always a priority, but can also be expensive. Trusts and tax efficient planning can help you to provide your family with the best start in life without breaking the bank.
As your family and business grow, relationships can become complicated or strained. A mutual understanding of your plans is, therefore, key in the preservation and growth of the family’s affairs for generations to come. A Family Constitution is a formal written record of the ethos, principles and ambitions of your company. It can also cover other aspects of a family’s wealth structure, such as Trusts and FICs. The Constitution is designed to ensure a ‘balance of power’ of both wealth and management between the various branches of the family.