In the event of the death of one of the business owners, how quickly would the family want that money back?
It is payable immediately, but it would be a problem if the surviving business owners did not have that kind of money available and they would not be in a position to pay it back.
Would this result in the surviving business owners needing to sell one of their properties to release equity? How will this affect things?
Future prospects
I think that over the next few years we’re going to see more landlords moving across to the SPV business model purely for tax reasons but this will open up a whole world of protection opportunities with buy-to-let landlords who have often been a tough nut to crack.
The trick for advisers is to not over complicate your process. Keep it simple and keep things clear.
Build your conversation around two key points: what is the problem and how do we fix it?
- Problem: what specifically is the problem? What would happen if? What would the effect be?
- Solution: what is the solution to fix this problem?
It does not need to be complicated, but this is another example of where proper financial advice is crucial for your clients.
Vincent O'Connor is senior business development manager at Royal London
