Family businesses—employment and succession

This subtopic considers some factors to consider when employing family members and non-family members in a family business and when passing on or selling a family business.

Employing family members in a family business

There are advantages and risks involved in employing family members within the family business. 'Hot topics' often include how members of a family can join the business, how their career progression will be regulated and what they will be paid. Potential problems can be avoided or minimised by putting in place a carefully drafted family employment policy regulating these issues.

Before an effective policy can be drafted, the family needs to decide how they are going to balance the risks and advantages of employing family members and quantify the trade-offs that they are willing to accept. Potential advantages of employing family members include trust between family members, understanding of the culture and ethos of the business and long-term commitment to the success of the business. Potential risks of adopting a ‘family first’ approach to employment include detrimental effects on the moral of non-family employees and ultimately on the economic performance of the business.

Key

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Powered by Lexis+®
Latest Private Client News

All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

View Private Client by content type :

Popular documents