“In this world nothing can be said to be certain, except death and taxes.” Never a truer statement, yet trying to plan for the inevitable can seem like you are tempting fate! Still, please do not underestimate how succession planning in the caravan park industry, as in many family businesses, can without a doubt be complicated.
In many estates, the assets of the mother and father can be released into cash and so this can be easily divided between the children. Where only some of the next generation wish to continue in the business, estate planning can be much more complex.
We have recently been working with a number of family businesses in the holiday parks sector, specifically in relation to the passing of ownership to the next generation. Here is what our experience tells us and how we have managed to provide structured solutions resulting in the desired outcome for all concerned. Can you relate?
There is no such thing as a “one size fits all” solution. Our approach is to fully understand the concerns and desired outcomes of the stakeholders, then tailor a solution working closely with legal advisers. Based on our experience in this area we have been able to deliver significant benefits to our clients, some of which are set out below.
Family owns a Caravan Park. Current shareholding is owned equally by Mum and Dad, whom have three children with a number of grandchildren. Two of the children work in the business with Mum and Dad.
The children who work in the business are concerned that a proportion of the business will pass to the sibling who does not work in the business. Mum and Dad want the business to continue but their desire is to ensure none of the children lose out on future income and protection. They do however have concerns over breakdowns in marriages and the ownership leaving the family bloodline.
Mum and Dad transfer a proportion of their shares to their children working in the business, at the same time their Wills also create a family trust and the balance of their shares is held in this trust for the benefit of all their children, together with their grandchildren.
The trust will have all the children as trustees, perhaps with an independent trustee to add balance. This structure will enable the children working in the business to make operational and strategic decisions about the business with confidence, because they have say across the shares in the business. It will also allow the business to benefit all children, with payments from the trust via income received from the company.
This possible structure gives Mum and Dad peace of mind over the future of the business, allows the children to take the business forward, whilst protecting the value of the assets and providing an income to all the children whether working in the business or not.
So while it may not be an easy subject to address, we have a wealth of experience to support you in planning for the future to ease the burden at a point in time when you least need to be thinking about the security of your business.