In 1759, Arthur Guinness took a 9,000-year lease on St James’s Gate Brewery in Dublin. It was a brave move and over the decades that followed the Irish stout became one of the best-known brews in the world, while the business behind it proved an outstanding generator of income for generations of his family.
The iconic stout created wealth and fostered a legacy that improved many lives. The Guinness and Iveagh trusts, set up in the 1890s, provided housing for the poor in London and Dublin respectively.
Of course, few family businesses prosper for hundreds of years like this. Even so, smart succession planning for business owners can establish powerful vehicles for supporting your family’s long-term financial security. It may also seed philanthropic legacies that give extended high-net-worth families a common purpose.
For business owners, everything depends on how well you plan and execute your succession plan. It’s always been important to pass a business on to capable management, with good governance oversight, but today’s rapid technological change and short product cycles make thoughtful business succession planning more critical than ever.
Why Business Succession Planning Matters for Long-Term Family Wealth and Legacy
Family businesses can be a highly effective way of passing on wealth, but as a business owner you need to put a plan in place for business succession. Do you want to keep the business in family ownership? If you plan to pass it on to your children, do they have the aptitude and ambition?
You may have close relationships with people in your business who feel like family – in which case, you may want to make sure they are looked after. Conversations with your family are vital to reach an agreement over the future of the business: our experts in succession planning for business owners can help you put the right succession plan in place.
Your business needs capable and dynamic management more than ever if it’s to survive and prosper. Depending on your wishes, and what the rest of your family wants, this management may come from within the family or outside.
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Key Elements of an Effective Succession Plan for Your Family Business
An effective succession plan for a business owner goes a long way beyond naming your successor. It plots a structured, long-term process that ensures the smooth transfer of leadership, ownership and knowledge. Your aim is to maintain the business’s value and continuity, as well as your family’s legacy.
There’s a wealth of research about crafting succession planning for business. Broadly speaking, it sets out the following six elements:
1. Clear vision and objectives
Establish a long-term vision for your business succession that aligns everyone in your family. Set strategic goals and profit targets.
2. Structured preparation
Build a timeline for your succession that includes preparation, transition and post-succession phases. Remember that succession planning for business is a multi-year process, not a one-off event.
3. Successor identification and development
Assess who has the aptitude to lead the business after you step down. They may be from within your family or outside. Provide the mentoring required.
4. Ownership and control
Decide who will own your business and how ownership will pass to them. Remember that fragmentation of ownership can weaken control of the business.
5. Governance framework
Establish a board with independent directors to oversee the business. You may also want to establish a family constitution outlining things such as values and mission, and dividend and employment policies.
6. Legal and tax planning
Update your Will and your business’s shareholder agreement, as well as any Trusts, to reflect your succession plan. When planning succession, business owners typically involve legal and financial advisors.
Tax Implications of Business Succession: How to Minimise Liabilities
In the past, government tax policy has incentivised families to hand businesses down through generations, providing a tax framework for succession planning and encouraging continuity. Under the Business Property Relief rules, your shares in unquoted trading companies could benefit from 100% Inheritance Tax (IHT) relief when handed from one generation to the next.
However, after April 2026, it’s proposed that the rules will change. After that date, only the first £2.5 million in value will qualify for full IHT relief. Above that level, the rate of relief will fall to 50%, meaning that IHT would be levied at 20% on your shares rather than the full 40%.
The new rules are complex and will influence succession planning for business owners. Before making your plans, you should contact one of our Client Advisors, as well as taking legal advice.
Using Trusts and Other Structures to Enhance Succession Planning
You can use a variety of structures to minimise tax while safeguarding your business succession plans. You may want to consider setting up a Trust or an investment company. Similarly, life insurance can play a part in managing Inheritance Tax (IHT) liabilities.
Structures to minimise tax can be set up over many years and should work alongside the rest of your business succession plan. However, the route you choose to take may depend on the nature of your business, its value and your objectives.
Again, if you contact one of our Client Advisors they will be able to advise you and, if necessary, refer you for further specialist legal advice.
In conclusion, a long-term well-structured business succession plan can help preserve and compound your family’s wealth. Few business owners are as successful as the famed business dynasties, but these show what’s possible.
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Important Information
Information correct as of 9 January 2026.
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