Business Property Relief Trust

Trusts Discussion
1

My client is looking at a Business Property Relief Trust in their Will, however, their shareholders agreement is set up that if on death of a shareholder the living shareholders must buy, I have read an article on the following link:

https://www.markmclaughlin.co.uk/iht-business-property-relief-the-binding-contract-trap/

that this is classed as a ‘legally binding contract’ with the HMRC and therefore the BPRT would fail. Therefore, the shareholders agreement would need to be changed to state the living shareholders could buy. The solicitor has questioned this, could you please advise what I am stating is correct as per the article?
Thank you,

Jude Rhodes
Lawrence Legacy

2

Yes it is, the more usual arrangement so as to secure the relief is a double-option agreement.

3

Yes Paul is correct. Shareholders agreements and partnership agreements can easily be a trap for BPR in these circumstances and cross options are more advisable

4

Thank you Paul.

Is this something the Solicitor to write in the contracts?

Jude Rhodes
Lawrence Legacy