Be smart and pass the family jewels on
Already buoyed by the jubilee celebrations, there was even more cause for celebration for the House of Windsor last week, when the "family firm" was valued at €55bn -- which is more than Spain's bank debt.
One report even suggested that this is what the royal family business is worth commercially -- not taking jewels and palaces into account.
Most family businesses are experiencing far less lucrative times, particularly here at home.
"A significant added pressure is the contraction in wealth in family businesses," says Family Business Ireland adviser JJ O'Connell. "Where once it might have supported partners, including mum and dad and several sibling households, now it can't. There's not enough value to maintain the wealth of funding the next generation."
There are other issues -- personal guarantees being called in by banks, debt, tumbling asset and pension values.
"Family business members work harder and live in the rock pools when the tide is out. But what's happened is, the tide hasn't come back in," O'Connell says.
But what do you do about any of this if you're running a battling family firm?
Try to hold what you have as best you can for a start -- but if you're about to retire and are passing on a farm, a retail concern, pub or some other business, try and do it in the most wealth-protecting way.
Is now the time to
pass on the business?
There are changes to capital gains tax (CGT) on the way that mean family business owners need to give serious consideration to disposing of company shares or assets.
Take the case of a family farm, for instance. In an effort to entice farmers to transfer to the next generation, the Government is bringing in changes to CGT relief that will kick in within less than two years.
Aundrea McDonnell of Taxback.com says these changes to retirement relief mean older business owners need to act on time to avoid being hammered on tax.
At the moment there is exemption on CGT for those aged 55 or over who are disposing of farm or business assets. However, government is lowering the relief for those aged 66 and over.
Passing the business
on to the kids
Before the Finance Bill 2012 changes, a full exemption from CGT was available where a business, company shares or a farm were passed on to a child. Under the new rules, full exemption will still apply to passing on assets to a child where the business or farm owner is aged between 55 and 65. At 66 plus, the relief is restricted.
There is also a stamp duty exemption sweetener to encourage the transfer of a farming business to "young trained farmers" under the age of 35 years, up to the last day of December 2012, providing they own and work the farm for five years after that.
Passing the business
on outside the family
In over 60 per cent of cases, children don't carry on businesses and succession moves outside the family.
Before Finance Bill 2012 amendments, full CGT relief could apply for disposal of assets of less than €750,000 outside of the family. Now this relief is being restricted, reducing the threshold to €500,000 where someone aged 65 and over disposes of assets.
None of this means you are going to be forced into retirement. "A key factor is that you don't actually have to retire to claim the relief, you can continue to have an involvement after the sale," McDonnell says.
These changes kick in from January 1, 2014. That might seem like quite a way off, but your succession blueprint needs to be in place well ahead of time.
Sunday Indo Business