Should I be nervous about going into business with my brother-in-law?

I plan to set up a business with my wife’s brother. Should we have some kind of agreement in place in case my wife and I split up and it makes relations with my brother-in-law difficult? I’m nervous about mixing my business and personal life without a contingency plan.

Emma Sharman, lawyer at The Legal Director, says: It is a good idea when starting a new business to spend some time thinking about the “what ifs” and this is especially true when you are going into business with family. This is completely normal, so I hope you can approach this in a positive and collaborative way. 

Taking time to discuss and agree on these things at the start will put you in the best position to succeed in your new venture. It will also make things much easier if you do encounter difficulties or changes in circumstances along the way.

Most of this can be set out in a simple agreement between the business owners. Depending on the structure of your venture, this might be a shareholders’ agreement or a partnership agreement, for example. You will need to discuss a number of key questions with your business partner.

There are several issues to consider. What is the objective for the business? What do you want to achieve, and what is the end goal? Do you want to sell in five years, for example, or run it long term and pass on to future generations? It’s also important to define your individual responsibilities. Be clear about who is expected to do what on a day-to-day basis. It is also vital to decide how decisions will be made. Do you both need to agree on everything or can some things be decided by one of you unilaterally?

Similarly, agree the value you will each contribute. This could be time, expertise, money or contacts. And what percentage of ownership of the business will you each get?

Other things to discuss include how you will fund the business and if it needs any start-up capital. If so, will one or both of you be expected to contribute? And, once money starts coming in, what will happen next? You need to think both about the use of any profits from trading activities and what happens to the proceeds from a sale.

Ironing out these details will reduce the risks of any disputes down the line. However, it’s also important to agree on what will happen if your business relationship does come to an end. You should talk through various scenarios — for example, a breakdown in the relationship, what happens if the business is not as successful as you hoped or someone decides to leave and the other person wants to continue. Having a clear path whatever happens will give you both peace of mind. 

Should I apply for probate myself on my mother’s estate?

My mother sadly died last month and now that the funeral is behind us, I am keen to be ahead of the game in dealing with her financial affairs. My father died some years ago, and she appointed me as her sole executor. I don’t yet have the full picture of her assets, but I believe she held a fairly substantial investment portfolio, a couple of bank accounts, and owned her home outright. How should I go about the probate process? Is it OK for me to do it myself or should I involve a professional?

Alice Edwards, associate at Winckworth Sherwood, says: Now that you have dealt with the immediate post-death tasks, the probate process is broadly formed of three stages, which I set out below. The process in Scotland — known as confirmation — is rather different.

It sounds as though your mother left quite significant assets, so it would be sensible for you to speak to a solicitor. They will be able to assist you with calculating inheritance tax (IHT) and applying for probate, and help you avoid costly errors. More generally, being an executor can be an extremely time-consuming and onerous role, which should be made easier with professional advice.

First, you will need to find out exactly what assets your mother held at the date of her death. You can do this by contacting her asset manager and banks, and arranging for a valuation of her house. You should also work out your mother’s liabilities under any credit cards, bank loans or utility bills.

You can use the government’s “Tell Us Once” service (you will have been provided with a reference number when you registered the death) to inform HM Revenue & Customs, the Driver and Vehicle Licensing Agency and other government organisations of your mother’s death.

Next, you will need to pay IHT, if it applies to your mother’s estate. Broadly, tax is payable on any assets above the nil-rate band of £325,000. However, the tax-free allowance may be much higher — up to £1mn — if your mother has inherited a nil-rate band from your father, and she left her home to you or another direct descendant.

You will need to complete an IHT return to inform HMRC of the net value of your mother’s estate. Four weeks after submitting the return, and once HMRC has confirmed that you have paid all the IHT due, you can apply for the Grant of Probate.

You will also need to apply to handle your mother’s estate. In England, people usually apply for a Grant of Probate to handle the administration. In Scotland, the process involves applying to the local sheriff’s court to confirm officially the executor’s authority to administer the estate. Most probate applications are now done online, using the government’s dedicated portal. The application process is usually relatively straightforward but the probate system is currently running with very long delays (up to nine months in some cases).

Once you have the Grant of Probate in hand, you have the authority to settle any outstanding liabilities and dispose of your mother’s assets, or distribute them to the beneficiaries under her will.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

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