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  • Every succession plan has tax implications.
  • Ensure your client gets good tax advice elsewhere if you can’t give it.
  • Never act for a mate just because he’s a mate.

You knew it was professionally unwise, but you just couldn’t say no to your old mate Peter when he asked you to help fix his family succession plan. You tried to explain, but then he said, ‘Maaate, come on, school mates and footie mates and you can’t help? Come on …what are mates for?’

So you said yes.

Transfer of the business

Peter’s parents Michael and Mary had for years run a successful printing business which, with Peter’s help, had adapted to the digital disruption facing printing businesses. Their daughter Pat was not involved and very much on the outer of the family.

Peter tells you his parents want to retire and hand over the business  to him.

The building in which the business operates was initially leased but purchased in 1984 in a unit trust in which Michael and Mary owned all the units. The business is run through a family discretionary trust set up on the advice of their accountant in 1999 when profits were high and tax planning important.

You duly meet with Michael and Mary who confirm what Peter said about the business. They also ask you to prepare their wills to leave everything else – their house and super – to Pat.

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