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Why business owners need to make a Will
Preparing a Will can be quite a daunting process. You have to think about Executors, Guardians, Beneficiaries and any funeral wishes. If you own your own business, the process can appear more complicated and sometimes overwhelming. You may be so busy running a business that it can be quite tempting to put off writing a Will. Jeremy Wilson, a partner and head of our Wills and Estate Administration department explains that the process can be simpler than you thought with the right advice.
The need to review your position regularly as your business grows and develops is essential for succession planning. In other words, who would inherit your business on your death? For some clients it is important that their business will pass to members of the family, for others it is more of an investment which will be sold on death.
How is the business structured and will this permit a gift to family members? How does the Articles/Shareholder Agreement/Partnership deed affect inheritances? Who will take over the business and any tax implications on the transfer? All these issues need to be considered when preparing your Will.
Who will purchase the business upon your death? In the case of shareholders, how will they be able to afford it and is there keyman insurance in place? If the purchaser is unlikely to be running the business between your death and sale, who will be able to do so and will the Will allow this to happen?
Sometimes just establishing a Discretionary Trust in your Will can be a very effective way of removing the value from the estate of your ultimate beneficiaries and mitigating tax at that time. This can work where the business itself is in the Trust or whether we are talking about the cash proceeds. With the introduction of the Residential Nil Rate Band the need to consider trusts with businesses run by couples has become even more important. Without trusts in place on the first death, you will easily find yourself losing this valuable allowance because of the £2M threshold.
What happens if you become mentally incapable at any time? Who would run your business in this event? It is imperative that you have Lasting Powers of Attorney in place so that there will be no delays if this happened. It could be the same individual who would run your personal affairs or it could be someone different.
We would recommend that all business owners prepare Wills and Lasting Powers of Attorney and regularly review and update them when necessary. To book an appointment with a member of our Wills and Estate Administration team please contact Christa Foster on 01689 887 884.