Experts Call For People To Structure Affairs
Business owners have been urged by will dispute experts at Irwin Mitchell to bear inheritance tax (IHT) in mind when planning for the moment they decide to leave the organisations.
The Will, Trust and Estate Disputes team at the firm have called on those involved in the running of companies to not ignore the importance of considering IHT when structuring their affairs for departure, as good preparation will mean they can minimise the impact of the rate on loved ones when they pass away.
Adam Draper, a solicitor in the team at Irwin Mitchell, explained: “IHT is payable at a rate of 40 per cent on all assets over £325,000. For example, the tax on a £1 million estate would reach £270,000.
“However, proper estate planning and legal advice can help those who have built up businesses think about how they can restructure and make changes which will ensure their loved ones are not hit too hard by IHT.”
The issue of estate planning has come into the spotlight following the deaths of wealthy businesspeople including Bernard Matthews and Shanta Pathak, the co-founder of the Patak food company.
Probate records have revealed that the latter left a net estate of under £35,000 when she passed away, a surprise to many who believed she would have been a millionaire. The Patak brand was sold in 2007 for an estimated £105 million.
The family also notably went to court in 2004 following the death of Mrs Pathak’s husband, and company co-founder, L G Pathak.
In that case, his son Kirit agreed to hand over millions of pounds worth of shares to his young sisters after they launched a claim in relation to not receiving an inheritance. The proceedings highlighted the stark differences between the traditional family succession, in which sons often benefit at the expense of daughters, and succession laws in general in the UK.
Discussing the probate records of Shanta Pathak, Adam outlined: “The revelation that Mrs Pathak’s net estate after outstanding affairs were settled stood at just £35,000 is interesting, as it suggests that the business decisions made by the family have helped her loved ones avoid the impact of IHT.
“Such issues are undoubtedly important for other business owners to consider as they plan for the future and are also considering how they want assets to be divided following their death.
“Both tax affairs and estate planning can be complex areas, so we would urge anyone beginning to put together a will to seek advice on how they can best make plans for their friends and family while minimising the amount of tax payable on their assets.
“Shows like Gerry Robinson’s recent BBC series Can’t Take It With You have highlighted the advantages of such a move and, while they can be difficult to do, such conversations with experts and family members allow people to make clear their intentions before they pass away.
“The right preparation can help people ensure that their family’s best interests are always at heart and ensure that loved ones are fully protected in every financial decision made.”
If you are involved in a will dispute or need further information about contesting a will, please visit our Will, Trust & Estate Disputes section