If you read our articles regularly, you’ll know that we often emphasise the importance of succession planning for your business.

However, an equally important action that some business owners delay or evade entirely is personal estate planning.

Deciding how you would like to pass your wealth on when you die, and to who, makes perfect sense to most people. Yet, many individuals – even wealthy business owners – do not form an estate plan until it’s too late.

Keep reading to learn two important reasons why business owners need to pay greater attention to personal estate planning.

1. Ensuring your family is protected

Many things in life are within our control, but we often can’t prepare for life’s most affecting events, such as illness, injury, or death.

While you might have your financial ducks in a row for now, putting a comprehensive estate plan in place means that if you passed away suddenly, your family could continue to live comfortably without financial stress.

When you begin putting an estate plan together as a business owner, it’s important to ask yourself these questions:

• Do I have enough in savings, investments, and my pension to support my family after I pass away?
• Would my business continue to generate income without me, and could this income help my family over the long term?
• Does my will (if I have one) clearly state how my personal and business assets should be distributed when I die?
• Do I have an appropriate level of life insurance for the assets I hold and my family’s circumstances?

Considering these questions carefully could reveal the steps you wish to take in order to complete your estate plan.

For example, if you have not yet created a will, drawing one up with the help of a legal professional could ensure your family benefits from clarity when you pass away. Or, if your existing life insurance could fall short in supporting your family upon your death, you may be prompted to revisit and amend the level of cover you have in place.

We often find that business owners lack the time to create an estate plan without professional guidance. But without one, your family could experience undue emotional and financial stress if you passed away.

Here at iQ Financial, we can help you draw up a comprehensive estate plan in case the worst happens – one that prioritises your family’s stability and peace of mind at every stage.

2. Mitigating tax

You may already be aware that when you pass away, your children and grandchildren may pay Capital Acquisitions Tax (CAT) on the amount they inherit. Spouses and civil partners are usually exempt from paying CAT.

Whether your loved ones will pay CAT, and how much they’ll be liable for, depends on the type of assets you pass down, as well as their value.

At the time of writing:

• CAT is charged at a rate of 33%.
• You can usually gift or leave up to €335,000 to a child before they would be liable to pay CAT.
• Similarly, you can normally gift or leave up to €32,500 to a grandchild before they would pay CAT.
• Some assets, including business holdings, benefit from tax-efficient reliefs and exemptions.

Creating an estate plan with CAT in mind means you could:

• Strategically offload tax-efficient gifts to family members over the coming years
• Calculate how much CAT your children and grandchildren may pay in future, factoring the relevant reliefs and exemptions into the final figure
• Use this knowledge to prepare your family for a potential CAT bill far in advance.

If you are a business owner, it is vital to look at these tax factors as early in life as you can.

With part of your personal wealth likely to be tied up in your business, the event of your sudden passing away could complicate the matter of inheritance for your family. Plus, your children and grandchildren may pay an unnecessary amount of tax if you don’t plan ahead.

Alternatively, with a professionally reviewed plan in place, your family could benefit from the peace of mind that they’ll receive a smooth transfer of assets without a needlessly high tax bill involved.

To learn more about how to protect your family’s financial future as a business owner, read our free guide covering tax reliefs and exemptions, protection options, and how the iQ Financial team can help you.

Work with an independent financial planner to form an estate plan that puts your family first

At iQ Financial, our goal is to help business owners gain more from their personal finances. We work exclusively with a small number of business owners and professionals like you, giving your finances, your family, and your goals our full attention.

Alongside the other professionals you have on board, your solicitor, accountant or tax adviser, we’ll help you create an estate plan that puts your family on a prosperous path without compromising tax efficiency.

Email us at clients@iqf.ie, or call 353 71 915 5560.

Please note

This article is for information only. It does not constitute advice.

It describes financial planning services that iQ Financial can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.

iQ Financial is not a tax adviser and tax advisory services are not regulated by the Central Bank of Ireland.