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Sole traders alerted on estate problems to keep trail open

Sole traders hoping to pass on the value of their business to their spouse after death should plan their strategy beforehand or face losing their trail, warns a Midlands IFA.

FSA rules say the estate of a sole trader has three months from the date of death to sell on the business or see all trail revert back to product providers.

Planning for the sale of the firm&#39s book should be as important as sorting out a client&#39s life insurance as many surviving partners will be unable to deal while selling the business in such a short time, says the Midlands IFA who wants to remain anonymous.

The FSA deadline means IFAs should expect the value of their business to be lost to dependants unless they leave instructions on how to sell on the client book after their death, says the adviser.

IFA consolidator Destini says it is not feasible for sole trader firms to be bought outright after the death or retirement of the RI because key personnel have been lost.

This process keeps the agency relationship in place with the provider and stops the trail from drying up, allowing a valuation of the business to be determined.

Destini group managing director David Collett says: “We can get involved where IFAs want to retire or where the RI dies but we do not buy out the firm. For IFAs with no succession planning, we can make a firm an appointed representative in around four weeks and keep the trail pipeline open.”

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