Are trusts an appropriate vehicle to hold shares in a family business?

Family businesses are rarely created with generational succession in mind. Businesses start small and develop over time. At some stage the owners of a business may need to decide whether to sell up or to retain the business in the family and pass the shares on.

If the decision is to keep the business in the family for the next generation thoughts will turn to how this succession is best achieved. Considerations will include asset protection business management and decision making as well as tax. An outright transfer of shares to the next generation has the attraction of simplicity but does not provide asset protection in the event of divorce or improvident behaviour. The company articles will require amendment if only family members own...