Wednesday, 27 July 2011

Who will run your business if you can't?

Could Your Business Go The Way of Gretna Green FC?

Gretna Green FC were a phenomenon of Scottish Football, a community club that soared from third division obscurity to the Premier League and crashed into administration almost overnight.

The story that is never told is what happened, why did the money stop? The case is a sad and a salutary tale for anyone who runs a business. The club was run by one man – dubbed the ‘Roman Abramovich of Scottish Football’ – sadly he was not in the best of health, more unfortunately for the club he was the only man who could sign the cheques and authorise payments from the bank so when he became seriously ill nothing could be paid and the whole company crumbled around him.

This could have been avoided with the right planning – in this case a Lasting Power of Attorney for his business dealings could have authorised someone he trusted to look after his and the company’s interests whilst he lacked the capacity to do so.

This story is unusual but highlights the need to extend your planning beyond the day to day running of the business.

Wills and Lasting Powers of Attorney are frequently pushed to the back burner but they are critically important when things go wrong or in planning your tax and succession strategy.

Ask yourself –

  • How would your business trade if you couldn’t make the decisions and sign the cheques?

  • Could the business continue if your estate was caught in the probate process?

  • Would you be content to run the business with your partner’s surviving spouse or children?

  • How do you buy your business partner’s family out?

  • Does your Will make the most of the Tax breaks available to the business?

  • What are IHT, BPR and APR, more importantly how do they apply to me?

If you don’t have good answers to these questions then you need to talk to us, call on (01778) 341490.

Hard work and dedication has meant that you have built up a sound business to benefit you and your family don’t let the lack of simple planning take it all away. 

Monday, 4 July 2011

Dilnot Report causes media waves.

The Dilnot Commission has published its report into long term care funding, the highlights are:

A maximum lifetime care contribution of between £25,000 and £50,000 with a recommendation that £35,000 would be the correct figure.

A £7,000 to £10,000 contribution towards 'Hotel Costs' if in residential care.

A £100,000 capital disregard as against the current £23,250.

Changes to be in place by 2013.

All excellent in theory, but with a projected cost of £1.7bn rising to £3.5bn after five years could the country afford it. My guess is not at the moment.

Dilnot thinks that the burden of the costs should fall to those already in retirement, but with £1,7bn being equal to a penny on income tax globally, and relatively few people in retirement paying tax would any government dare to make all its taxpaying pensioners into higher rate taxpayers in one fell sweep. Political Suicide.

Dilnot says that implementing his reforms would bring certainty and peace of mind to those thinking of future care prospects - he even suggests that you could insure against the cost of care in the future.

Interesting ideas - Good Media fodder, time will tell if the coalition are brave enough to see this through.