Help protect what you pass on, as well as the tax you save.

It depends on who owns the shares and what the court decides. A court dealing with a divorce looks at the couple's financial resources, and that can include shares a child owns directly. Shares held through a discretionary trust belong to the trustees, so the child has no fixed entitlement, but the court can still take trust and company interests into account. Good structuring helps reduce the risk. It cannot guarantee an outcome.

Shares a child owns outright can form part of what a trustee in bankruptcy deals with. Shares held by a discretionary trust are not the child's property, and articles can require a bankrupt shareholder's shares to be offered back to the family at a valuation. Insolvency rules have their own reach, though, so these tools help reduce the risk rather than remove it. We design them around each child's circumstances.

It is a clause in the company's articles saying that if a defined event happens to a shareholder, such as divorce, bankruptcy or death, their shares must be offered to the company, the trust or other family shareholders. The price is set by a stated valuation method. The aim is to keep shares inside the family. Drafting matters, because the trigger events, the price and the timing all need to work in practice.

Pre-emption rights mean a shareholder who wants to sell or transfer shares must first offer them to the existing shareholders, usually at a fair value, before anyone outside the family can buy. Combined with a ban on transfers to outsiders without board consent, they make it difficult for shares to leave the family by sale or gift. They sit in the articles and are usually repeated in the shareholders' agreement.

They can help. A holder of non-voting growth shares has no say in running the company, so a former spouse or a creditor stepping into their shoes gains no influence over the family's investments. The parents, usually holding the voting shares, keep control. Non-voting shares do not stop a court or an insolvency practitioner placing a value on the shares, so they work best alongside the other tools.

A court is not bound by the legal form of a structure. In a divorce it can take into account interests in trusts and companies when deciding what resources a person has, and it can look at how realistic it is that a trustee would pay money to them. That is why we say the structure helps protect wealth, and why the paperwork, the family's conduct and the timing all matter.

In a discretionary trust the trustees own the shares and decide who benefits, so no beneficiary has a fixed right to the shares or their growth. That can reduce what a divorcing spouse or a creditor can reach. It also keeps the shares from passing automatically outside the family. The trade-offs are inheritance tax charges on the trust and extra administration, which we explain in our trust page.

Where a child owns shares or receives money from the structure, a pre-nuptial or post-nuptial agreement is worth discussing. In England and Wales such an agreement is not automatically binding, but a court can give it weight, particularly if both sides took independent legal advice and disclosed their finances. We encourage the conversation early. A family lawyer should advise on the agreement itself, and the rules differ in Scotland.

The articles are a public document that sets the basic rules of the company. A shareholders' agreement is a private contract between the shareholders and can go further: how decisions are made, when a shareholder must sell, how the price is set, what happens on a family dispute, and what the family expects of each other. Contract terms can also be updated more easily as the family changes.

Several tools work together. The articles can require shares of a deceased shareholder to be offered to the family or the trust at a stated value. Shares held in the discretionary trust do not pass under a will at all. Each family shareholder should also have a will consistent with the structure. Without these, shares can pass under the intestacy rules or a will to a person the family did not intend.

Normally only on the family's terms. The articles usually prohibit sales to outsiders and require shares to be offered first to other family shareholders, the trust or the company. A child who wants to leave the structure typically sells back at a valuation defined in advance. How much freedom a child has is a decision we make with the parents when we design the share classes.

That depends on the articles and the child's will. We can draft the articles so that shares are offered to the trust, the parents or the child's own children at a defined value, rather than passing automatically to a spouse or someone outside the family. The child's estate may still have inheritance tax and capital gains tax points on the shares. We normally review the structure with the family's solicitor.

It can. A lifetime gift into a discretionary trust is a chargeable transfer. Above the available nil-rate band it is charged at up to 20%, and tax of up to 6% can arise at each ten-year anniversary and on exits. Gifts of shares to individuals are potentially exempt transfers with no entry charge. We weigh that cost against the protection the trust provides, case by case.

Usually not. If the person who set up the trust can benefit from it, or could later be added, the gift can be a gift with reservation and stay in their estate for inheritance tax. For the trust to work, the person setting it up, and normally their spouse and minor children, should be excluded from benefit. Parents can still hold the voting shares and act as directors, which does not by itself reserve a benefit.

They can affect the value, because unquoted shares are valued on a hypothetical sale between a willing buyer and seller, taking account of the rights and restrictions attached to them. HMRC values each case on its facts and there is no fixed discount. We therefore treat restrictions as a protection tool and not a tax tool, and our team prepares the valuation when shares are created or gifted.

Often yes, by changing the articles and putting a shareholders' agreement in place, which usually needs the agreement of the shareholders. Care is needed if the changes alter the rights attached to shares, because altering the share rights of a close company can be treated as a transfer of value for inheritance tax and a value shift for capital gains tax. Take advice before any change to the share rights.

It cannot guarantee protection from a divorce settlement, a bankruptcy, a dispute among the family or a challenge by HMRC, and it does not remove the parents' own risks while they hold shares or a loan account. It will not stop a court looking at the whole picture. The aim is to reduce the risk and make the family's wishes clear in the documents.