Palmers Solicitors introduces enhanced estate planning with latest digital offering

Our Private Client team are excited to announce the introduction of an innovative digital offering to estate planning clients – meeting the needs of a dynamic client base with growing concerns for sustainability.

We have now teamed up with Zenplans, an online estate planning tool, designed to help individuals easily and securely organise, store and selectively share life’s most important information.

How Zenplans works

Zenplans is designed to provide peace of mind for families, storing all information and documents securely but accessibly whenever it’s needed.

All of your affairs are kept in one place, helping both you and us administer your estate as effectively as possible.

It is also designed to support financial planning for significant life events such as a house purchase, giving you a truly holistic view of your estate.

As a new adopter of the platform, we’re currently offering our valued clients access to Zenplans completely free of charge until 30 June 2024.

Beyond that, use will likely only be subject to a nominal charge of £24 per year – without creating a contractual obligation for our users.

A sustainable step forward

With many estate planning clients focusing on creating a secure future for their family, we’re proud that Zenplans is a paperless platform, reducing the waste produced during the process.

Aside from being a more sustainable approach, paperless estate planning through Zenplans keeps all information in one place and reduces the risk of lost information and insecure data.

Ultimately, we have made this move to enhance the service we can offer to our estate planning clients.

To find out more about using Zenplans, we’d urge all clients to watch this two-minute explainer video and read our dedicated factsheet before getting started.

Taking out a business loan is a common way of financing a new business or the growth of an existing one – but there are key considerations that borrowers and lenders will have to make.

Borrowers, typically business owners or sole traders, will need to decide how much they want to borrow and how much they can realistically repay.

Upon application, lenders will decide what level of risk the borrower represents and whether they can offer the necessary amount.

One of the ways that borrowers can increase their appeal to lenders is by applying for a ‘secured’ loan – a loan which secures the funding against the business or individual’s assets.

Why take out a secured loan?

Done properly with due diligence, a secured loan can open a lot of doors for growing businesses.

As it offers security to the lender, loan providers are typically willing to offer a larger loan than for unsecured amounts, which can provide vital funding for business activities.

Before accepting terms on a secured loan, borrowers should seek legal advice regarding the agreements they are required to enter into to understand the extent of their liability and what assets are at risk if they fail to make repayments.

What assets do lenders look for?

This depends on how much borrowers are looking to take out and what assets they own that can be put up as collateral. It may also depend on the lender’s specific borrowing policy.

As a rule of thumb, the more you borrow, the more security the lender will require.

Examples of security are legal charges, debentures, personal guarantees, corporate guarantees or fixed charges over other valuable assets of the borrower such as intellectual property or valuable equipment.

In practice, this might mean that, if a business fails to make repayments on a loan, it’s directors may find assets such as real estate or personal possessions (if they have charged personal assets to secure the corporate lending) are sold to recover the sums due under the loan agreement.

The costs associated with the security will depend on the security sought by the lender, but can vary from £500 to £1,500 (plus VAT and disbursements) each.

It is also normal practice for the borrower to pay the lender’s costs for preparing and putting the security in place.

Both parties should agree any legal costs in advance before incurring said costs.

Before entering into a loan agreement, borrowers should seek independent legal advice to ensure that they fully understand the risks to personal and business assets.

We can provide impartial, straightforward legal advice to anyone considering providing personal guarantees to a loan or financing.

Contact Dashna Morarji-Sagoo by emailing DashnaMorarji-Sagoo@palmerslaw.co.uk or calling 01375 484443 or BJ Chong by emailing BJChong@palmerslaw.co.uk

The contents of this article are intended for informational and educational purposes only.

For business owners, flexibility can be as valuable as stability when it comes down to finding the right commercial property.

Understanding how to effectively include, negotiate, and utilise break clauses can save your business considerable time and money. Here’s what you need to know:

What is a break clause?

A break clause is a section of a commercial property lease which allows the tenant to break the lease and exit the property at a certain point before the end of the lease.

In the case of properties such as offices, a lease may last 10 years with a break clause at five years.

They are appealing to tenants because, in the case that a company grows or needs less space within the period of a lease, tenants can leave the property in search of a tenancy which better meets their needs.

Break clauses in commercial property contracts

A break clause must be explicitly included in the lease agreement to be valid.

When drafting or reviewing a lease, it’s crucial to pay close attention to the wording of the break clause to ensure it aligns with your business needs.

Typically, the clause specifies conditions under which the lease can be terminated early, including notice periods, any financial penalties, and the state in which the property must be returned.

This means that you need to have your lease carefully reviewed before signing it and make sure that it will be suitable for your business for the entire duration of your lease term prior to the break clause.

How do I negotiate break clauses?

Negotiating a break clause requires a balance between your need for flexibility and your landlord’s need for security and an assurance that they will have tenants for a specified amount of time.

You should be aiming for a break clause that allows you to exit the lease with minimal financial burden, such as negotiating early exit fees.

This will provide you with the option to respond to changing market conditions or business needs.

Landlords, on the other hand, may seek to include conditions that protect their investment, such as longer notice periods or requirements for the property’s condition upon termination.

Key points to negotiate with your landlord

As we have said, there are three major issues that you’ll need to negotiate with your landlord in order to reach a mutually satisfactory contract:

• Notice periods – This is how far in advance you must inform your landlord of your intention to terminate the lease. Shorter notice periods offer more flexibility for tenants, while landlords may prefer longer periods.
• Break penalties – Some break clauses include financial penalties for early termination, even though you are doing so within the bounds of the contract, so you can make your lease more cost-effective by negotiating these costs down.
• Condition of Premises – Although not specific to break clauses alone, most early termination clauses state that a property must be left in a certain condition. Returning the property in good condition is always best practice to avoid contractual disputes.

Make sure to do this in plenty of time before you plan to take possession of the property and avoid signing a contract that you are not happy with.

When break clauses may not be appropriate

Despite their benefits, break clauses are not always the most useful approach to a tenancy.

The most important thing to remember is that break clauses typically go both ways, meaning the landlord can also break your tenancy at these points without legal repercussions.

For tenants planning to invest significantly in the leased property, securing a long-term lease without a break clause can offer more stability, ensuring that your investment is not lost due to an early termination.

Landlords, particularly those with sought-after properties, may prefer leases without break clauses to ensure a stable, long-term income stream.

For bespoke advice on break clauses and commercial property contracts, please feel free to get in touch with our Commercial Property team.

Safeguarding sensitive business information is crucial at all stages of a company’s journey, especially during pivotal moments such as acquisitions, sales or mergers.

In these situations, confidentiality and non-disclosure agreements (NDAs) are essential tools for protecting your business’s valuable assets and securing its competitive advantage.

However, without solid and enforceable confidentiality measures in place, business owners may find themselves vulnerable to risks that could compromise the integrity and value of their business.

What to consider in an NDA?

Key business transactions often involve sharing sensitive information, including:

• Financial statements
• Legal commitments
• Strategic business plans
• Unique technologies
• Undisclosed partnerships

The essence of your business’s value is entwined with these critical pieces of information. Sharing this kind of information without a safeguard can threaten not just the transaction but also the competitive position of the business involved.

NDAs act as a protective barrier, enabling the safe exchange of vital information under the assurance that it remains confidential and legally shielded from unwarranted exposure.

Finding the perfect balance between openness and security is critical. Over-sharing can jeopardise a deal while appearing too reserved might deter potential partners.

NDAs help delineate the boundaries of what’s confidential and who’s privy to it, fostering a productive environment for due diligence and collaboration without risking your strategic interests.

Legal protection and enforcement

Enforcing NDAs and confidentiality agreements adheres to specific legal standards, including mutual agreement, value exchange, intent to create legal relations, and clear terms.

Should a breach occur, the aggrieved party has several legal avenues to pursue, from cease-and-desist letters to court-ordered injunctions, damages, profit recovery, and indemnities against third-party claims.

Initiating legal action requires presenting a compelling case of breach and impact, with the proceedings typically launched in the High Court or County Court, based on the case’s complexity.

It’s crucial to note that NDAs cannot be used to conceal illegal activities or prevent whistleblowing. Their enforceability can also be contested if deemed overly broad or unreasonable.

In scenarios where confidentiality is of utmost importance, parties may seek a court-issued confidentiality order to protect sensitive information disclosed during legal proceedings.

Setting up an NDA

The intricate nature of business acquisitions introduces various risks, including technological, staff, and cultural integration challenges.

Confidentiality agreements are vital in managing these risks by guarding against premature deal disclosures, which could unsettle employees, alienate customers, or invite competitors’ interference.

Moreover, NDAs and confidentiality agreements encourage innovation and collaboration, providing a secure foundation for businesses to explore new ventures and partnerships while protecting their intellectual assets.

You must seek independent legal advice during a transaction to ensure that your interests are properly protected by the right confidentiality measures.

For guidance on crafting NDAs or confidentiality agreements for your next business transaction, please don’t hesitate to get in touch with our expert team.

In short, you may face delays or difficulties in applying for probate and distributing assets according to a Will or rules of intestacy.

When someone passes away and you become responsible for administering their estate as their Personal Representative (PR), you may become liable to pay Inheritance Tax (IHT) on their assets.

This will be due on the total value of the deceased person’s estate if this totals more than £325,000, unless certain exceptions apply which can reduce the IHT due, including if the deceased person:

• Leaves money to charity in their Will
• Passed on certain business assets
• Leaves assets to their spouse
• Leaves a first or main home to their children or grandchildren
• Gave away assets seven or more years before their death

You’ll need to work out the value of the deceased person’s taxable estate to calculate if IHT is due.

You must do this and pay the IHT due by the end of the sixth month after the person has died, otherwise HM Revenue & Customs (HMRC) will add interest onto the sum due.

How IHT is paid

If IHT is due on an estate, it can be paid in a number of ways, including:

• From the deceased person’s bank account using the Direct Payment Scheme
• By you or a relative from your own bank account
• Using the British Government Stock Scheme
• Through the transfer of national heritage property
• Through a trust
• Via a commercial loan secured against the assets within the estate

HMRC will expect that you pay IHT before applying for probate, which gives you the legal right to administer a person’s estate and sell or distribute assets.

However, in certain circumstances, you may not be able to do this.

This might be because of:

• Poor liquidity – If the deceased person had a range of assets but little cash, then most of the value of their assets will be tied up and not readily available to pay IHT without being sold, which can’t be done without probate.
• Complex estate valuation – Valuing an estate accurately can be a complex process, especially if it includes unique or hard-to-value assets such as antiques, artwork, or shares in private companies. This complexity can lead to delays in calculating the exact IHT due, making it difficult to pay the tax within the six-month window after the deceased’s death.
• Disputes over the Will or estate – Disputes or challenges to the Will can delay the process of settling the estate, including the payment of IHT. Such disputes may need resolution before proceeding with probate, and this can significantly delay the process, making it challenging to pay IHT on time.

If this applies to you, or you can’t pay IHT for any other reason, you must take steps to alert HMRC of this fact.

First steps

If you can’t pay the IHT due on a deceased person’s estate, then it’s critical that you approach HMRC and explain this as soon as possible.

This is because interest at a high rate will be added on to any IHT that is unpaid or paid late.

HMRC may recommend that you make every practical effort to explore ways to raise funds to pay the IHT due. It may also permit you to pay the IHT due against certain assets within the estate in instalments.

If you’re struggling to pay IHT, it’s also important that you stay updated on changes to your obligations and how this may impact your probate application.

Upcoming changes

Following the Chancellor’s 2024 Spring Budget, it is becoming easier to obtain a ‘grant on credit’ for Inheritance Tax.

Under current regulations, PRs of a deceased person are required to pay IHT due on the estate before applying for probate. This currently includes taking out commercial loans if needed.

However, in recognition of the issues this could cause for PRs, the Chancellor has announced that PRs will no longer be required to take this step before applying for a ‘grant of credit’ – meaning probate is granted on the understanding that IHT will be paid later, when assets from the estate have been sold.

For advice on applying for probate and managing Inheritance Tax liabilities, please contact our team today.