1 September 2020

Protecting your wealth after you’ve sold your business

Congratulations, you have sold the business that you worked so hard to build and develop and the sale has gone through after weeks of negotiations and hard work. Now is the perfect time to make sure you get your personal affairs in order.

If you have a cash lump sum

It may be that the sale of your business has or will produce a cash lump sum. It’s a good time to decide how you will invest that and what impact it will have on your lifestyle and your personal tax situation.

One of the taxes that should be considered is inheritance tax (IHT). Most business interests will attract an element of business property relief (BPR) for IHT purposes if the interest has been owned for more than two years. If you die whilst owning this interest then usually this will have a 50% or 100% relief for IHT purposes. This is very generous. If you sell your business interest in your lifetime, you may wish to consider investing some or all of the proceeds in a product that can preserve that BPR.

If you have retained a business interest that would benefit from BPR, you may not want to leave this interest to a surviving spouse who is already exempt from IHT as on his or her death, they may have converted the business property into cash and neither allowance will apply on their death.

Alongside a financial adviser who can help with specific products, we can look at the best way to maximise the IHT reliefs and allowances available to you.

General tax planning and gifting

Also consider some general tax planning to potentially reduce the size of your estate if it would otherwise be taxable. It may be that now is a good time to make a gift to support your child or children in buying their first property or helping your grandchildren with regular payments towards their school fees over a period of time.

Buying property

Alternatively, you may wish to spend all of the proceeds on that luxury property overseas in which case, we can help to ensure that your succession plans cover this as well.

Make sure your will is up to date

Once you’ve sold your business, as well as helping you protect your assets, we can help you update your will. This is one of the most important steps to take. Make sure your will includes guardianship provisions for any young children and that you appoint the appropriate people to administer your estate and carry out your wishes.

Enjoy

Finally, whether you’re moving on to your next venture or planning to take life a bit easier, enjoy it.

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About the Author
Victoria Baker, Partner & Notary Public

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