Legal Case Study

Protecting a Family Business from Inheritance Tax

The problem

Our clients were struggling to administer their father’s estate, which included a family business. They couldn’t afford to pay the inheritance tax due without selling up. There had also been a disagreement about how the rest of the estate would be distributed.

The process

We assessed the estate and found it was entitled to business relief. This cut down the inheritance tax due by over £3 million. We also arranged mediation for the clients to help them come to an agreement about the rest of the estate.

How this helped

Our clients had recently lost their father. He’d bequeathed his estate to be split equally between the three of them. The estate included a successful family business.

The siblings believed they wouldn’t be able to afford the inheritance tax that was due without selling the family business. They really didn’t want to do this as they all worked within it.

They were also having problems in relation to portioning out the remaining parts of the estate. Although they had all been bequeathed an equal share, they were finding it difficult to agree on who should get which assets.

We worked with the clients to assess their father’s estate as a whole and determine what could be done to save the business and keep them out of court.

We identified that the estate was entitled to Business Relief. Applying this meant that the 40% inheritance tax charge did not apply to any of the business assets in the estate. This saved the siblings over £3 million and kept the business safe.

Once we’d assured the future of the family business, we brought the siblings together for a mediation session with an accredited mediator specialising in probate disputes. In this session a number of options were put forward as to how the estate’s remaining assets could be fairly distributed. After some discussion, the siblings came to an agreement they were all happy with.

This successful mediation saved our clients from having to go to court. This would have been extremely emotionally draining and would have cost each of the siblings around £40,000 in legal fees each.

Our clients were pleased to be able to move forward together with their business without the burden of a looming court case or additional legal fees.

The result

Applying business property relief meant our clients didn’t have to sell the business. And thanks to our successful mediation, they were also able to avoid a court case and a likely £40,000 each in legal fees.

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