Family Investment Companies: Briefing
Family Investment Companies (FICs) are used to help families with their estate and succession planning.
FICs are tailor-made to meet the individual requirements of each family, which means that no two FICs are exactly the same. How each FIC is structured and how it is managed will differ from family to family.
FICs are considered a tax-efficient way in which to hold a family’s assets, such as money, shares, land, property and buildings.
At Barker Gotelee, we can work with your accountants and tax advisers to put in place a FIC structure to suit your family’s requirements. When setting up a FIC there are some key issues to consider.
Who can own shares?
Since FICs are set up to hold a family’s wealth, who can own shares and when those shares may or much be transferred are key considerations. All FICs generally restrict share transfers and provide for when shares must be transferred.
Some FICs limit share ownership to direct lineal descendants, while others allow spouses to own shares but on the condition that those shares must be transferred on divorce.
How will the FIC be managed?
How a FIC is managed differs significantly from family to family. However, control over the FIC may be exercised by its board of directors and its shareholders.
The more senior generations generally exercise more of the control over the FIC. There are too many ways in which to balance power to set out in this briefing.
What rights attach to shares?
Voting rights, dividend rights and rights on a return of capital are all issues to consider.
Again, there are too many variations to detail. However, often, the shares are set up so that the senior generation’s share value is frozen or fixed (or even diminishes over time) while the value of the descendants’ shares grows.
The senior generation generally control the FIC (and as a consequence its underlying assets) but the descendants may share in the wealth (either immediately or in the fullness of time or on the happening of specified events).
How can we help
Setting up a Family Investment Company involves a range of legal, tax and practical considerations. Getting the structure right from the outset is key to ensuring it works effectively for your family both now and in the future.
Our team can guide you through the process and work alongside your professional advisers to put the right structure in place.
To find out more, please contact Victoria in our Corporate & Commercial Team on 01473 611211 or fill out our enquiry form.
