<p>Half of business owners don't even consider the transfer of business to heirs as a possible scenario and plan to sell the company.</p><p>How to ensure the transfer of assets by inheritance? What are the obstacles, challenges, solutions?</p><div><h2><strong>Total mistrust to people outside a certain circle</strong></h2></div><p>The entrepreneur doen't trust anyone except a narrow circle of the elect. Sometimes only partners and friends enter this circle, but even the family doesn't know the main questions about business.</p><p>Mistrust concerns, among other things, consultants who can tell how to solve certain business problems. Despite the fact that inheritance rules are not 100% formed, there is an experience that is adopted from world colleagues or from those who have already created their own plan for inheritance.</p><p>Banks, family offices and consultants create special units that deal with issues of inheritance and its planning. And maybe it's time to at least slightly lower the level of suspicion and ask clarifying questions about the inheritance.</p><div><h2><strong>Risks of the heir: dependent or artist</strong></h2></div><p>Another reason why many entrepreneurs don't plan an inheritance is risks directly related to the heir or heirs.</p><p>First, many fear that a child or other heir isn't ready to take the reins of the company, especially a large one. He can be a minor, study, be interested in other things or simply be a high-aged dependent who only spends the family's money at steep parties.</p><p>What kind of inheritance in the form of an operating company or large assets can there be a speech in these cases?</p><p>If you don't enter the heir in advance, he will not even know WHAT assets he gets. Offshore companies and trusts, foreign accounts, Russian business and real estate in Italy are pieces of the puzzle that the creator collected and hid for a very long time.</p><p>As the researchers note, often only the owner of the company (CEO) knows exactly what and where the company is located. In the event that he leaves the business. The business is able to lose not only the leader, but the very viability.</p><p>We are not saying that any large capital in Russia still has too many "intangible" assets: relations with suppliers, agreements with law enforcement agencies, promises of "those who can not be called". All this is not inherited, and without this business will lose significantly in stability and predictability.</p><p>There is another risk: the majority of entrepreneurs are large families with 2 to 6 children. Plus, spouses, parents who by Russian law receive automatically a part of the inheritance. And how to deal with this?</p><div><h2><strong>Testament is not a panacea</strong></h2></div><p>It's perfectly reasonable to make a will, which specifies what assets exist, how and to whom they are transferred, how to manage them. Another question is that a testament can always be challenged and the right of children, spouses, parents to part of your assets can not be ruled out.</p><p>Parents can be given a share in the company, but does it make sense to appoint an elderly mother to the factory director? The spouse wants to maintain the previous standard of living, but doesn't want to sit on the board of directors? It is reasonable if the sphere of its interests is the education of children and their own small business.</p><p>Especially before the instructions given by you in the will come into force, 6 months must pass. During this time, your company may go bankrupt without good management.</p><p>Add to this foreign assets, of which no one knows, distrust of outsiders and an undeveloped strategy for behavior in crisis situations and get complete unpredictability for your business.</p><p>If your goal is to create at least a bit of predictability for your enterprise, then study the following recommendations.</p><div><h2><strong>Rules of inheritance: how to transfer an asset by inheritance without destroying the business</strong></h2></div><p>The first thing we have to accept is the fact that we are all mortal. If you plan to have your business last longer than you do, then you need to prepare for it.</p><p>Planning is the key to success. This concerns both the creation and conduct of business, and its transfer to the next generation.</p><p>What points need to be worked out at the planning stage:</p><ul><li>Who will manage the company during the 6-month wait for the will?</li><li>Which of the heirs to transfer the company, shares, and who is more convenient and more profitable to transfer bills, real estate and other assets?</li><li>Arrangements with partners;</li><li>Preparation of the heir to work duties;</li><li>Structuring of property with the Holdings help, including offshore ones;</li><li>Legal confirmation of decisions taken.</li></ul><p>First, every company must have a plan in case of a critical situation. This is not necessarily the final departure of the owner or CEO. A person can just get sick, get into an accident. While it is not, the company must continue its effective work.</p><p>In this case, the boards of directors, job descriptions for top management, and a well-developed structure for the transfer of power and duties will help. Look at the state power: if something happens to the president, the authority is adopted by the vice-president or prime minister.</p><p>A similar principle will work in the business company.</p><p>If you are doing business with partners, these nuances should be solved with them: how will the business operate after the departure of any partner, who will get the shares and the right to decide the future of the company, which of the applicants for the position will be supported?</p><p>Secondly, consider who will stand at the helm of the company, and who should be given only shares / business shares with an annual profit. Some of your heirs are more inclined to leadership, educated and interested in the company. And someone is more interested in creating and selling their own paintings.</p><p>The first you can take in advance and prepare for the post, teach all that you think is necessary. The second is to provide means of subsistence. With reasonable planning, one does not even have to worry because of the requirement in the law to grant a share of the inheritance to parents, spouses and all children: allocate one real estate, interest income from business without the right to interfere in the affairs of the company; another - directly to the company itself, the right to decide its fate.</p><p>Of course, the decision in any case won't be easy and the can still be challenged. But at least you will be able to advance the business successor in advance and protect those who will not be engaged in business.</p><p>It's also important to understand the following point: someone besides you should represent what your company looks like as a whole. Unfortunately, the use of offshore companies, although considered legal, is perceived by the townsfolk (even the members of the closest circle that is outside the business), as something dangerous and malevolent.</p><p>At the same time offshore can be an excellent way to transfer business and other assets by inheritance.</p><p>Firstly, because they operate in another law and according to other rules. This allows you to avoid some taxes, speed up the process of obtaining assets. Secondly, if you transferred an offshore company to your son or daughter, then everything that is recorded on it is transferred along with it.</p><p>Inside an offshore company on Nevis or in Belize, you can save real estate, vehicles or shares of companies. Even if the business structure consists of several levels, then you will give the heir to a top-level company and all below-going structures will be in his possession.</p><p>Trusts and funds have been used for a long time in the West, where funds and assets are waiting for their time to go under the management of the heirs, when they grow up or achieve a certain result: they will create a business, obtain a degree, etc. These trusts often help to lower taxation for you: you give a part of the assets to the trust, cease to be a beneficiary, but provide the future for your children, spouses and all those you want to take care of.</p><p>Experts who help plan the inheritance of assets, pay attention to the following fact: the head of the company does not necessarily have to stand up exactly your child or spouse. In general, according to statistics, family companies exist for no more than 3 generations and this is in the West, where private property has not disappeared for a hundred years.</p><p>To survive the company longer the worked out structure, where business management is transferred to the one who knows how to do it qualitatively, helps. Children, as mentioned above, you can transfer the company's shares. It is reasonable to do this, including through offshore companies, so that no one can take away his inheritance from a man who is not ready for the harsh realities of Russian business. Management can be transferred to another specialist.</p><p>The main thing is to prepare it in advance.</p><p>And one more extremely important point: all agreements on inheritance, management in critical situations should be formalized on paper, in the form of a legal document. By the time when you need a plan for reacting to a critical situation, the one with whom you negotiated can also rest, quit or lose power in the company. Here again we will have to work with our own distrust of other people and the state. State authorities, laws and constant changes don't add optimism in planning a business strategy and, especially, the inheritance process.</p><p> <span style="color: #444444; font-family: Arial, sans-serif; font-size: 10.5pt; text-align: justify;"> </span></p><p style="text-align: center;">You can learn more about the Trust-Fund of <strong>Castle Family Office</strong> by clicking on the link below:</p><p style="text-align: center;"><strong><span style="color: #444444; font-family: Arial, sans-serif; font-size: 10.5pt; text-align: justify;"><i><a href="https://castle-gaaf.sg">CASTLE-GAAF.SG</a></i></span></strong></p>