The requirements for making a legally valid will are set out in a statute from 1837. One such requirement, that a will be witnessed “in the presence of” two witnesses, has caused significant practical difficulties during the Covid 19 pandemic. With many clients naturally wanting to make or update wills whilst self-isolating we have had to find inventive practical solutions that satisfy the legal requirements. Jersey has already passed a law to allow the witnessing of wills via Zoom or video link and this week the UK Government has announced that it too will implement this change.

This development is to be welcomed as it will bring outdated legislation in line with modern technology. The change in the law is to be backdated to 31 January 2020 so that anyone who has mistakenly witnessed a will via Zoom or video link will receive retrospective validation whilst the new rule is to remain in place until at least 2021. However the change is also likely to cause problems as scope for undue influence “off camera” and the danger of losing documents is likely to result in a rise of inheritance related disputes. We have to assume that as remote measures such as Zoom are likely to stay, the Government will look at making a permanent change and at the same time putting in place safeguards to prevent undue influence and duress. For more information please feel free to contact Jane Shaw or Fiona Bushell.

The Covid-19 crisis has resulted in an increased demand for wills as part of contingency planning. Whilst understandably clients are keen to make wills quickly it is important that specialist advice is given to ensure that your will meets your objectives in a tax efficient manner and also is drafted to avoid any costly disputes or challenges in the future.

We have many years experience in drafting wills for people in business and we often achieve this via telephone, Skype, Zoom, Facetime and other methods no matter how complicated your affairs or circumstances may be.

Before drafting your will we discuss your circumstances and objectives with you, advise on any tax or family issues and prepare drafts together with an explanatory memorandum setting out the terms and their effect in practice.

Given the practical consequences of the pandemic, the signing and execution of wills has presented some challenging obstacles. Clients who wish to make a will in the current climate should not be put off from doing so as we have identified workable solutions to the challenges in relation to both advising and signing. We will ensure you receive the appropriate level of advice and that the wills are validly executed.

In order for a will to be valid it must be signed in the presence of two independent witnesses. These must witnesses must be:
 Over the age of 18;
 Not benefit from your will in any way;
 Not be the husbands, wives or civil partners of anyone who benefits under your will;
 Not to be the Executors or Trustees of your will.

The witnesses must sign their usual signatures and print their names and addresses. The witnesses must witness the will in the presence of you and each other. It is this requirement that has presented difficulties in the “lockdown” period as three people need to be present at the same time.

If you choose to sign a will during the lockdown we have advised that clients should do the following:-
 Keep a distance of 2 metres between you and your witnesses;
 Use separate pens to reduce the risk of cross contamination;
 Consider standing on your/your witnesses doorstep or in the open air when signing;
 Wear gloves;
 Wipe your will after signing.

We have found that asking a neighbour to meet in the garden or dealing with the matter over a garden fence or on a car bonnet/windscreen will suffice. All that is required is that the witnesses must be able to see you signing the will and must both be in your presence at the
same time. There is a concern that presence simply through a window may not meet the legal requirements.

In terms of preparing the will we have advised clients to print it out double sided, staple the pages together and then use a hole punch to produce two holes down the left hand side and tie them together with a piece of string. This should provide a way of binding the will in a similar form to that which we would usually produce in the office.

We have also asked clients and witnesses to initial each page of the will (other than the page upon which the execution clause appears) and take a picture of the pages of the will on a phone sending it to us by WhatsApp so we can confirm it has been correctly executed and store a soft copy.

Any clients wishing to make wills in the current climate should be reassured that we can advise and deal with wills as normal.

If you would like to discuss your existing will or to make a new will please contact Jane Shaw:

We have unrivalled expertise advising owner managed businesses on succession planning and exit strategies to ensure the smooth devolution of a business to the next generation or a tax-efficient sale. Planning in advance is critical to secure wealth generated by a family business for the next generation.

We guide clients through the process of planning the most appropriate strategy in their particular circumstances which often includes putting in place structures to mitigate inheritance tax which may arise on the death of the business owner (or their spouse) and tax charges on the sale of a business. We work closely with clients to ensure that decisions are specifically tailored to the nature of their business and their family circumstances.

Tax Efficient Structures

Planning often includes tax efficient will structures maximising the availability of Business Property Relief (BPR), the setting up of trusts to take shares in a family business prior to a sale, shareholder agreements and life insurance/cross-option arrangements to enable executors of a deceased shareholder to sell their shares back to the existing shareholders so that the business can continue to run.

Exit Strategy Suitability

The suitability of a trust, shareholder agreement or cross option depends upon the family objectives and the structure of the business, for example, whether one family owns the entire business or whether it is split between two different families.  Trusts are often especially useful where some children work in the business and others do not, as in this case the business owner may wish to separate control of the business (the making of day to day decisions) from economic ownership (who receives dividends or sale proceeds).

Tax planning in relation to the sale of a business can make a big difference to the value that is ultimately extracted for the family. Shares in a trading company qualify for BPR which is a valuable relief from Inheritance Tax. Once there is a binding contract to sell the business this relief is lost. It is possible to make gifts of assets which qualify for BPR to a trust prior to a sale without an upfront charge to tax whereas cash sale proceeds cannot be put in trust without an upfront charge. It is therefore often sensible to put a proportion of a business owner’s shares into a trust prior to a sale if he wishes to make long-term provision for the benefit of his family.

Our Role

We look at each client’s individual circumstances such as the risks of divisions within the family, the extent to which he wishes to give away any value of the business to reduce liability to Inheritance Tax or how the business would operate post-death without the owner. We have significant experience advising entrepreneurs and owner-managed businesses on tax and estate planning to ensure the value of the business they have built up during their lifetime is protected for their family in the future.

Here at Pannone Corporate, we have specialist experience in the setting up and management of trusts. A trust is, broadly speaking, an arrangement which splits legal ownership from economic benefit. This allows you to choose people you would like to legally own your assets (the Trustees) to make decisions and manage assets for the benefit of the Beneficiaries (the people entitled to benefit). This can be useful for tax planning purposes or for protecting young or vulnerable beneficiaries who are not well equipped to manage their own assets. Trusts also provide flexibility so that Trustees can take account of the Beneficiaries’ circumstances as they develop and decide when and how they should benefit.

Separating economic ownership and control is often helpful in ensuring that assets are passed to the intended people in the right way and in allowing businesses to continue to operate post the death of a majority shareholder.

Why Set Up a Trust?

Trusts are often used in wills to protect young or vulnerable beneficiaries or those at risk of financial difficulties or divorce in the future. The Trustees have flexibility as to the timing and manner of distributions which allows them to stagger payments to Beneficiaries and bring the trust to an end as and when control is no longer required.

Shares in private companies are often put into trust either as a form of Inheritance Tax Planning ( by way of a trust set up during the shareholder’s lifetime) or by will where a shareholder wishes to choose who makes decisions regarding the business and who benefits from dividends or sale proceeds. For example, where a shareholder has several children but one or two of them work in the business and the others do not, he may appoint the children who are involved in the business as trustees (and directors) whilst still ensuring that the other children benefit from the profits of the business.

The Role of the Trustee

Trustees are under strict duties to look after the assets under their control for the benefit of their beneficiaries so it is vital to choose your Trustees carefully as these are the people who will decide how and when funds are released from the trust. Acting as a trustee should not be undertaken lightly.  We have significant experience advising trustees of their duties and preventing/solving disputes between trustees and beneficiaries. Trustees can be family members or trusted friends or advisers and can include the Beneficiaries themselves. Trustees have to act unanimously (unless the trust deed states otherwise) so it is important to appoint people who are able to work together efficiently.

Tax Implications

Trusts have significant tax implications (both Inheritance Tax, Capital Gains Tax and Income Tax) which need to be carefully considered prior to them being established. There is no “one size fits all” structure and advice is required in each circumstance to establish how a trust arrangement suits your family circumstances and is likely to be cost-effective in the long run. Different forms of trust are taxed in different ways. Tax is an important consideration in deciding whether and how to establish a trust and what the pros and cons of the trust will be now and in the future.

Type of Trust

There are various different types of Trust. Some trusts are discretionary which means that the Trustees have complete discretion as to the timing and manner of distributions amongst a class of beneficiaries. A Trust can also be a Life Interest Trust which means that one person is entitled to the income from the Trust during his or her lifetime with capital automatically passing to certain Beneficiaries on the death of the life tenant. This is commonly used to provide for spouses in wills, ensuring that any assets not required by a surviving spouse pass to your children on death and cannot be diverted to any future partner or children of a spouse. Bare trusts are another form of trust in which the Beneficiary is treated as owning the assets themselves and can call for them to be transferred into his or her name once he or she attains the age of 18. Specialist trusts also exist for the protection and maintenance of disabled beneficiaries.

Pannone Corporate Can Help

Trusts can either be set up by will or during the lifetime of the individual. We consider each client’s circumstances and objectives carefully and set out the pros and cons of any Trust structure for the future. We guide clients through the process of deciding whether a Trust is likely to be appropriate for their family or business.

For more information, contact our team either by one of the methods listed here or by calling 0800 131 3355.

Building a successful business takes time, dedication and years of hard work.  In order to make sure that hard work doesn’t go to waste it is important to plan ahead and ensure that the business could continue to run if you became ill or had an accident and were not able to manage your own affairs. Without a Lasting Power of Attorney (LPA) no one could run the business on your behalf or access bank accounts without applying to the Court of Protection which can be a lengthy and stressful process. In the case of a business, the delay in obtaining an order allowing someone else to manage the business on your behalf can cause serious damage to the business.

Illness or incapacity are often under recognised risks for owner managed businesses.  Making an LPA will mean that your chosen Attorney can make decisions on your behalf and keep operations running as normal. Without this, the business may struggle to function if you were to become mentally incapacitated.  Simple matters such as paying wages, dealing with suppliers’ contracts and putting transactions through the books may not be possible in your absence.

WHAT IS AN LPA AND HOW DOES IT HELP?

An LPA allows a person to appoint an Attorney to make decisions regarding their business interests and affairs including shares in a company.

If you lose mental capacity and there is not a valid LPA in place business partners or family members may have to apply to the Court of Protection to arrange for a court-appointed Deputy to officially make decisions on your behalf. Applications to the Court of Protection take a minimum of four months and often go on for longer. During this time the business may suffer if it is not able to be run efficiently.

Making an LPA is a fairly simple and cost-effective way of making sure that if you cannot run your business you can choose someone you trust to do so in your absence.  

We have many years’ experience advising business owners in relation to LPAs and succession planning for owner managed businesses.  

Most people know that probate is stressful and time-consuming.  Difficulties can be made worse in an estate where shares in a company are involved.  Owner managed companies or family businesses are often the main sources of income for surviving family members which makes it even more important to ensure that the business can continue to run and your family can extract value from the business in the event of a death.

A well drafted Will creating a trust can make sure that the shares in your business pass to the person or people best able to make decisions in relation to the business.   This may not always be the people you want to receive the benefit (for example where children are your main beneficiaries). Choosing the right executor and trustee is vital where businesses are involved.  You can appoint whoever you would want to make shareholder decisions as Trustees so that they can maximise the value of the shares for the benefit of your family. It is also important to consider how Trustees will interact with the Board of a company and whether there is a way of ensuring Board Representation for the Trustees so that they can make commercial decisions on behalf of the company.

It is vital where businesses are concerned to ensure that disputes do not arise when a person dies.  Disputes can cause huge stress and legal costs and often result in family members being unable to access a value from a business.   Where family companies are involved it is vital to ensure that trustees or executors also have a role on the board as it is the directors of the company who will remain responsible for declaring dividends and deciding when value leaves the company.

Trusts are often useful where clients want to appoint one person (or a professional) to be legally responsible for running the business with a value being passed to family members.   Where there are a number of different family members who are intended to benefit from the shares it is often preferable to have one or two family members as trustees (the ones with the greatest knowledge of the business) so that they can make commercial decisions for the benefit of the family as a whole and if the business is sold participate in the sale process. Where the shares are split between a large number of shareholders difficulties can arise in relation to the sale of the business.  Appointing the correct trustees can enable them to make decisions in relation to extracting value from the business or engaging in a sale process without referring to or seeking the agreement of each family member. It is obviously important to appoint trustees whom you trust to carry out your wishes and look after your family in the way you would wish.

Shareholder agreements are also useful in respect of family businesses as they can enable the family of a deceased shareholder to sell their shares to other shareholders.  This works well where there are, for example, two families running and operating one business. Shareholder agreements are often accompanied by life insurance policies which enable a lump sum to be available so that the surviving shareholder can buy out the deceased shareholder’s family.   This can enable the family of a deceased shareholder to extract their value from the business without needing to remain involved in the business.

We specialise in tax efficient wills for clients with owner managed businesses and shareholder protection agreements and trusts.