Family Investment Companies: Should you have a trustee shareholder?
min readIn our latest video in the Family Investment Company (FIC) series, we explore an important question: how should FIC shares be held for the next generation? One option is a trustee shareholder – which has implications for control, flexibility, and tax planning.
Why consider a trust?
- Longevity & Flexibility: A trust can last up to 125 years, can offer discretion over when and how beneficiaries benefit and importantly can include future descendants.
- Asset Protection: Discretionary trusts provide an extra layer of protection against financial risks such as divorce or bankruptcy. Shares held outright fall within an individual’s estate and are exposed to third-party claims.
- Inheritance Tax: Trusts fall under the “relevant property regime” (up to 6% every 10 years), whereas outright ownership is subject to 40% IHT on death.
Points to weigh up: Trusts offer flexibility and protection but come with added compliance and cost, and there are other taxes to consider to e.g. CGT and Income tax.
Choosing the right structure is key to long-term family and tax planning. Watch the full video for a deeper dive into these considerations, and stay tuned for more insights in our FIC series.
