Your Business and your Will

Posted on September 18, 2010

You’re fit and healthy, busy running your business and there aren’t enough hours in the day as it is. This may be why recent research has revealed that large numbers of business owners are failing to make a Will, despite the risk of serious implications for their family and business partners.

There are many reasons why making the time to invest in advice from a Will Writing specialist is a really good idea, whatever the size of the business – from sole traders, to partnerships to limited companies. The costs of drawing up a Will reflecting your individual circumstances pale into insignificance when compared to what others might have to pay if an inadequate or non-existent Will were to lead to a successful legal challenge:

You can protect your business
If a claim is made against a deceased business owner’s shareholding it could cause serious, perhaps fatal problems for the company. All Director shareholders should ensure that they have a well-drafted Will which is compatible with their articles of association or shareholder agreements. In the case of partnerships, the death of a Partner means that the firm is automatically dissolved and the appropriate proportion of capital and income passes to their estate. If the surviving Partner(s) wish to continue trading they would need to buy the deceased’s share which could place significant strain on cashflow or even force the sale of vital company assets. The combination of a Partnership Agreement and correctly-drafted Will, together with the appropriate insurance, can prevent this.

You could prevent a nasty falling-out
Perhaps your business is family-run and you have a relative who expects to take over when you die. Without a correctly-written Will your relative may find that they have to buy out the competing claims of other shareholders, or family members, who have never contributed to the welfare of the business. Family firms already provide fertile ground for disagreement given the tensions involved in running a business, and this will be exacerbated by insufficient estate planning resulting in a complicated morass of legal problems.

You could save tax
Many businesses qualify for an exemption from inheritance tax (IHT) so careful Will planning can ensure that the legacy from your business ‘cascades’ down to the next generation without incurring punitive rates of inheritance tax. This is of particular significance if your intention is that your spouse should have access to proceeds of the sale of your business on your death, which should then transfer to the next generation at the appropriate time.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Business Protection is something that Blueprint can provide and Will Writing is a service that we can facilitate for you. Will Writing is not authorised by the Financial Conduct Authority (FCA) and Blueprint accept no responsibility for this specific service offering.