A family investment company can be a good alternative to a trust if you have assets you would like to set aside for future generations. However, setting up a watertight family investment company requires a legal team with extensive private client and corporate expertise, not to mention an understanding of all the issues involved. We bring this expertise and will work with you and your tax advisers to put in place a bespoke structure that protects and manages your wealth for future generations.
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A family investment company can be a tax-efficient and practical way to manage your assets for future generations. You should think of it as a long-term estate planning strategy – at least seven years for inheritance tax purposes and more likely 15 to 20 years.
As the name suggests, a family investment company involves setting up a company and putting your assets into that company. You set up different classes of share for your company and assign these as required. Different shareholders have different powers and benefit in different ways. These can change over time, for example when a shareholder comes of age or to ensure maximum tax efficiency. Sometimes, but not always, you also set up a discretionary trust to manage the assets and income of the company.
Because of the flexibility it offers, a family investment company can be a good option when you have teenage children who you would like to benefit in the future. It can also be a useful way to ensure multiple generations of your family benefit at each stage of their lives.
Despite the advantages, a family investment company is a complex legal undertaking and it is vital to engage the services of a legal team with the extensive private client and corporate expertise that is required. As a Top 100 UK law firm, we have that expertise.
What is a discretionary trust?
A discretionary trust may be required to manage the assets and income of a family investment company. A discretionary trust gives the trustees you appoint the power to make decisions about how to use the income from the trust and, depending on the setup, the capital. A discretionary trust can be a good option when you want to protect wealth for future generations. For example, your grandchildren may not have need of the income now, but they may do in future. A discretionary trust can also be a good option if you have beneficiaries who are not capable of dealing with money themselves for whatever reason. *
How long will the documents for a family investment company take to draft?
As with all these things, it depends on your particular situation and requirements. Frequently, we will be asked to prepare the documents following a “steps paper” prepared by your accountant or tax adviser however, we are typically able to prepare draft documents within a week.
We recognise that a family investment company can be a tax-efficient vehicle for many people. We also recognise that because of their complexity there can be considerable initial charges involved. To address this concern, we offer a fixed price family investment company package that gives you transparency and peace of mind.
We will start by establishing the fundamentals of your situation to confirm that a family investment company is the right route for you to take. We will then discuss the details to allow us to draft all the paperwork involved.
Your matter will be principally handled by our private client team and you will have a single point of contact throughout. However, a family investment company also requires the input of corporate legal experts and we will draw on the services of our corporate team as required. We will also liaise closely with your accountant or financial advisor, who in many cases will have been the person who referred you to us.
Once the family investment company has been established, we will stay in regular contact and advise you if there are any changes in the legal or tax landscape that could affect the purpose of your arrangements.
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