This story is sponsored by LCF Law.

Every family business has its own story to tell. This is what makes family businesses distinctive - but it can give rise to complex legal challenges too.

Family dynamics can fundamentally impact the running of the business and relationships within it, and vice versa. Not only can a failure to manage legal matters effectively leave your business affairs open to interpretation and dispute - it could also lead to painful or even catastrophic rifts within the family.

Prevention is always better than the cure. To minimise risk and support your business's continued success, it's important to work with trusted solicitors to formalise your business's set up and aspirations and get all the correct documentation in place.

Planning for life events

Your business's long-term prospects hinge on your family's private affairs. You should consider the impacts that life events such as birth, marriage, divorce, loss of capacity and death may have and prepare for them. A family constitution documents your business aspirations with provision for different life events.

More formally through company articles for association, shareholder agreements, trusts, prenuptial agreements and lasting powers of attorney, you can enable the smooth running of family affairs within the wider context of the business.

Protecting your assets

Ownership and management of a family business's property can be highly complex, with members of the family and often non-blood relatives holding different shares. Life events can bring about significant change, causing assets to be redistributed.

It's important to define how the assets are divided up, how they are managed financially and legally, who makes the decisions and how they will be distributed as changes occur.

Working together

Matters can become increasingly challenging as your business grows, with different family members bringing differing interests, skills and levels of involvement, and people from outside the family joining the organisation.

To manage this effectively, you'll need to formalise its structure and make provision for the future.

Succession

Whether through normal retirements or death, dealing with succession can be legally and emotionally challenging. Planning for the inevitable means that decisions can be made and conversations had at a time when they won't be clouded in grief or other emotions.

Where the succession of the business no longer suits the needs for your family, there are many aspects to consider and discuss to ensure a smooth sale, from the tax implications to employment issues.

Dealing with conflict

Even with the best of intentions, potential issues can be overlooked and disputes can arise. From conflict over ownership and power struggles to inheritance disputes and unfulfilled promises, these can be upsetting and difficult to resolve when family are involved.

Wherever possible it's best to be proactive to reduce the likelihood of conflict occurring by identifying where there may be legacy issues or risks, and working to mitigate them. Where there is already friction, a good solicitor can help prevent matters from escalating by working with all parties to identify a suitable compromise.

Find out more: 

LCF Law has branches in Harrogate, Ilkley, Bradford and Leeds. To find out how they might be able to help you, visit the website or call 01423 502211.