There was a thread on financial planning LinkedIn of the treatment of businesses, homes and inheritances when creating a financial plan. The original post said that they value all of these assets at €1.
As with everything, I do not think it is a black or white issue and you must look at each case as it applies to each client you are dealing with.
Part of owning a business is to build wealth through what you have created. There is a risk in working for yourself and part of the reward is that you are creating an asset that can be sold in the future. For most successful company owners, their business is the biggest asset that they own. And with Retirement Relief and Entrepreneur Relief, there are very tax efficient ways of selling the business.
When it comes to working with business owners, we emphasise that they should not be dependent on the sale of their business to be financially independent. Imagine a financial crash like 2008 happened again and your entire retirement income was to come from the sale of your business? The asset you have built up over decades is no longer worth what you need it to be. What do you do? Sell it at a lower price and run out of money in the future or keep on working and wait for its value to go up again? What if that never happens or even worse, the company goes bust?
We always encourage business owners to engage in traditional pension planning. As owners, they can make large contributions to their pensions over the years (they often need to to make up for the years of no contributions while they build up their business). That way they have other income streams in retirement and not just the money from the sale of their business.
With most small Irish businesses, it can be difficult to put a value on it. We use a conservative value for the business but put €1 as the value in the plan. Using our sophisticated financial planning software, we are able to see how much you need to sell the business for so you do not run out of money. Clients now know the minimum price that they need to sell their business for. This can help business owners in negations if the two parties are close on a price. There is no point in a deal falling apart if the two parties are not far apart and the seller knows that they will get enough money to have a wonderful retirement and do all the things they want to do.
What is more important is preparing business owners to sell their business. It takes years to get a company in position for a sale. Small businesses can be run in a manner that makes sense to the owner but not to a prospective buyer. There needs to be a clear manner in how the business is run and operates. This can take time to put in place and the accounts tidied up before they go looking for a buyer.
Unless there is clear instruction from the client that they intend to downsize, we do not put it in the main plan for clients. Most people live in their homes for decades and do not want to move. Their life is around that area and they are comfortable there.
If the client lives in a big house, we will look at it as a “What If” scenario if they are going to run out of money in the future. Empty nesters of big homes are more likely to downsize than the owner of a 3-4 bed semi-D. Bigger homes are more difficult and expensive to maintain so they are more likely to be sold in later life.
For the majority of financial plans we do not include inheritance. Why? Because we want our client’s to be independently wealthy and not reliant on the death of a family member to achieve financial independence.
Adding in an inheritance of several hundred thousand euro will plug any gaps in a financial plan but there are still lots of unknowns:
When we do include inheritance is when it is imminent. A parent is elderly and unwell and the inheritance will be paid in the next number of years. Even then, we will use conservative estimates to include in the plan.
Steven Barrett
17 November 2025