Succession Law: The Importance of Having a Will

Although we might not like to think of it, death is a certain fate for us all.  When we pass away, our families will go through a stressful and traumatic time as they come to terms with their loss.  At the same time, there is a requirement for the administration of our estate, and this is usually bestowed upon a close relative or friend during this already painful time.  However, a lack of foresight and planning can be catastrophic, leaving behind a tangle of assets and liabilities and possibly a hefty inheritance tax bill, depending on jurisdiction.  On top of that, the absence of a will can mean a distribution of assets on the basis of standard 'default' rules, rather than on the basis of your individual preferences.  In this article, we will look at some common provisions in the absence of any will, and aim to justify the benefits of making a comprehensive and clear will during your lifetime.

Most jurisdictions will bear some liability to tax on death.  This can be a specific problem for the administrators of estates, usually close friends, who must ensure every known asset and liability is accounted for before making legacies and signing off the tax bill.  A major problem comes with the personal liability attributed to the administrators, which means that should anything 'slip through the net' which is later discovered, there may be increased liability to tax.  In practical terms, this could mean a surprise bill for several thousand which has already been distributed in legacies and for which the administrator must personally account.  Providing for these outcomes in a will is one of the best ways of avoiding this hassle and stress, and it can also be the best way to ensure all assets and liabilities are uncovered.  By drafting an effective will, you can be sure your loved ones don't face financial hardship after you're gone. 

In the absence of a will providing specifically for the administration of a deceased's estate, it is up to the laws of intestacy to determine what happens to the entirety of our worldly possessions.  Unfortunately, this doesn't usually correspond with the way we'd like things to turn out.  For example, in a number of jurisdictions there are automatic provisions for spouses and kids, meaning you can disinherit, even with a will.  There is also usually a default order of preference of who gets what and how much they get, which doesn't necessarily match your favourite relatives, or correspond to actual family set ups.  In fact, cohabiters might run into problems getting anything, including the house in which they live without proper testamentary provisions in their favour.

As you can see there are a number of obvious benefits to drafting a will during your lifetime.  Sadly, many thousands of people die each year without making these provisions, and it really is a real headache for their friends and relatives who are left with the burden of a fair settlement.  Intestacy causes hostility and stress, which can be readily avoided by just simply making a written will.  If you haven't made a will, it is probably a good idea to make a appointment as soon as is convenient with a legal adviser to do so, to ensure your family are provided for as you would intend and to promote a favourable distribution of your estate on death.

Taxation Law for Small Businesses

Taxation law is a complex and in-depth area of concern for the small business owner.  With potential pecuniary and criminal consequences, it is of paramount importance to ensure as a business owner, you are familiar with the tax consequences in your jurisdictions, and the ways in which you can minimise your liability.  Whilst one of the most legally important things to understand as a small business owner, taxation law also provides an excellent opportunity for saving money and increasing profitability within a small business environment.  In this article, we will look at some of the main and most common tax implications of running a small business, and some of the most effective ways of ensuring you pay less tax through your small business operation.

Tax regimes vary from jurisdiction to jurisdiction, and the implications of running a small business also vary, both in terms of the legal and financial requirements.  Having said that, there are a number of common elements that transcend jurisdiction and appear in numerous guises across various systems that can be of use to the small business owner.  One of the first things to consider as a small business owner is to establish a limited liability company.  The primary reason for this is that limited liability companies usually provide a more relaxed tax regime as compared to income tax liability.  A sole proprietor operating out-with the parameters of a corporate entity is liable to account for profits as income, which can lead to a greater tax liability and potential individual state contributions.  As a corporate entity, the owner can pay himself via share dividends, which carry a lower tax liability and thus minimising his overall liability to tax.  This is significantly better than paying oneself a wage, which bears the tax liability from both ends, i.e. the company is liable to taxation as is the employee.

Another essential for the small business owner is what is known as capital allowance.  By means of capital allowance, business owners can offset the acquisition cost of assets on a graduated scale in accordance with the specific principles of the regime in question.  This is in effect a deductible expense, which ultimately minimises yearly tax liability.  There is a particular benefit in that many regimes allow an accelerated relief for business assets.  This can be exploited to an extent by acquiring assets through the business, for example a car, which can also be used for personal purposes.  Rather than buying a car from personal income, buying it through the company allows you to offset the amount of the expense quickly against your business profits, which ultimately reduce your liability to tax. 

Before embarking on any tax reducing strategies, it is important to ensure you are acquainted with the specific laws of your jurisdiction to avoid running into trouble with the authorities.  In some of Europe, for example, there is a requirement to declare any specific tax minimising strategies to the government to allow for rectification of loopholes.  It is important to ensure you are acquainted with the specific laws to avoid potential criminal liability as a consequence of ignorance.  By familiarising yourself with the laws in your jurisdiction, you can avoid the potential pitfalls and create a tax planning strategy that provides the most cost effective solution for you and your small business.