Over the past few months I have been discussing the importance of applying 10 key principles of tax planning to a family business.
Today, we reach the last two of these principles: Principle 9 Carefully choose which assets are to be included in the family company or companies and in which form. In every family and every family business the range and type of assets will be different. It is very important to consider the assets of the family as a whole, to decide which assets are best used in the family business and which assets should be kept out of the family business. There may need to be two holding companies, one for family personal assets and one for family business assets. Business assets I have previously explained the usefulness and importance of family-business holding companies. In general, assets that are used in the business are usually best transferred to the family-business holding company and assets that are for the personal use of family members kept out of the business. Assets that are transferred to the holding company can then be used by that company as collateral for loans or other forms of financing. You should also plan for the fact that in some circumstances there may be advantages in transferring such assets back to the family company when the holding company has used all the available tax benefits, for example, depreciation. The form of transfer also needs to be considered. For example, with land, it may be preferable to grant a lease of the land to the family business holding company but retain the ownership of the land. Personal assets The personal assets of the family will also vary. It may be appropriate in the case of some of these assets
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