Q: My wife and I moved our business online when lockdown came and have been so successful that we have already expanded once. Now we have plans to diversify and bring our children into the business. At some stage we may consider outside shareholdings as a way of attracting investment to expand even further. If we do this, would setting up a family trust protect our family interests?
A: A Family Trust would certainly be worth consideration as it can be a difficult balancing act managing the aspirations of family, business and a mix of shareholders who may have differing interests and visions for the future of both the company and themselves. There are also other advantages of having a Family Trust drawn up, for example protecting assets from divorcing spouses or business creditors, providing for children under 18, and as a part of inheritance tax planning.
You would need to have a family trust deed drawn up by a solicitor. The deed should include the names of the trustees and beneficiaries, list all property, funds or assets to be held in the trust, and lay out how you want the trust to be managed. You can have one or more trustees, and these can be changed during the lifetime of the trust. The trustee is the legal owner of everything held within the trust and is responsible for the day-to-day management of the trust and paying any due taxes. If there is more than one trustee, they must act equally and manage the trust for the equal benefit of all the beneficiaries.
Trustees must keep beneficiaries informed of decisions they make and provide accounts, but they do not have to seek approval from the beneficiaries for decisions they make. However, they cannot alter the terms of the trust unless there is a clause in the trust deed allowing them to do so, or if they get consent from all the beneficiaries.
This question has been answered by Robert Williams, a Partner with GHP Legal. If you would like to speak to someone about this or any other legal matter it is still possible, and we are doing everything we can to ensure that we continue to offer our high levels of service to our clients. Where possible, we ask that you communicate with us by phone or email. If you have a new enquiry or for an appointment visit www.ghplegal.com or contact one of our offices: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194