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Private Company & IHT planning

Distributions in accordance with will

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A shareholder in a close private ltd has left his shares in his will and stated that "the shares should be administered in such  way as to allow a payment of £x to be made to Y within 3 years".

What is the most tax advantageous way to make such a payment? Can a new share type be set up & Y is the only share holder? Can Y be issued redeemable shares which are then purchased by Ltd for £x at future date?

The ltd deals in high value goods, what would the tax implications be if Y were given items of stock?  Would this have BIK implications?

TIA

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Hallerud at Easter
By DJKL
27th Mar 2018 21:38

Not sure existing shareholder has capacity to direct what company does from beyond the grave.

I think you have to be clearer re who inherits the deceased's existing shares, is this the same person as Y, are there other shareholders, who will be the directors of the company post death of the deceased, what percentage shareholding/degree of control of the existing company did the deceased hold (presuming event has passed) and how did solicitor, who presumably drafted the will, envisage this would all work?

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Replying to DJKL:
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By Accountant A
27th Mar 2018 22:02

Quote:

how did solicitor, who presumably drafted the will, envisage this would all work?

Indeed. Or maybe there was no solicitor involved. Maybe someone did it for free "off of" the internet?

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By steph_03
28th Mar 2018 10:08

The deceased was a majority shareholder and the shares have been left to family members.

The deceased didn't have cash available to leave the money directly and knew that the family members who inherited the shares would be willing to fulfill his wishes.

Just trying to do so in the most tax efficient manner. I suppose the Q is how to best distribute cash to non-shareholders (regardless of what is in will). Y does not currently hold any shares.

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Replying to steph_03:
Hallerud at Easter
By DJKL
28th Mar 2018 10:33

So, in effect Y is left a sum in the will but there are not enough liquid resources held by deceased to satisfy that sum, the other beneficiaries inheriting his shares?

No expert on this but appears those who are inheriting the shares (over distribution of estate) need to personally square the inheritance re Y, they either need to club together and settle the sum or if Y is agreeable personally acknowledge their debt to Y and pay it up over time.

Now whether they get funds to do this from dividends on the company shares they hold, whether the company agrees to say issue them with bonus shares of a different class which they pay to Y in satisfaction of the liability for the specific bequest, who knows, but surely it is the other beneficiaries who have an obligation to Y not the company, what they do with their shares in the company to satisfy said obligation is their concern and playing with the company shares is only likely to work if their individual obligations to Y marry up with their shareholdings in the company (the ratios are similar)

I should add things will also likely only work if Y plays ball with the others.

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Replying to steph_03:
Hallerud at Easter
By DJKL
28th Mar 2018 10:31

Duplicate post

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By trust.pem
28th Mar 2018 10:47

It sounds as though you may have a conditional gift in the will whereby the shares are left to the family on the condition that they pay £x to Y within 3 years.

I agree with DJKL that this is a personal responsibility of the family shareholders and is not a liability of the company.

The executors should to be cautious to ensure that the condition is satisfied to ensure that the family are indeed entitled to the shares (possible subject of forfeiture if the condition is not satisfied).

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