If you own a business – whether it’s a partnership or you’re a sole trader – it’s important to factor in what could happen to the business in the event of your death.
Perhaps you haven’t got around to writing your will or you’re leaving it until you get older, thinking you’re not at the age to think about the consequences of dying yet.
As hard as you may try to avoid talking about the ‘what ifs’ and the subject of your time coming to an end on this earth, it’s your responsibility to approach this with the same strategic manner you would any other part of your business.
By having a will in place, you secure the future of the successful empire you have worked so hard to build and the loved ones who have helped you along the way. This powerful document determines how your estate is handled and by whom.
Think about it. If you leave your business in trusted hands – someone who values your work – your legacy will continue long after you’re gone.
However, if you happen to fall into the 60% of adults across the UK who have not written a will, you may be risking it all. [link: https://www.thisismoney.co.uk/money/news/article-3807497/Nearly-60-Britons-not-written-will.html ] Failure to have a professional will in place means your business and personal assets will fall under intestacy rules and be handled according to the state regardless of your wishes. To make matters worse, the loved ones you leave behind will have no control as to where your assets end up.
Here’s how dying without a will can affect your business and family’s future:
Your business becomes subject to intestacy rules
When you die without a will, it’s called intestacy, or dying intestate. [https://www.gov.uk/inherits-someone-dies-without-will ] When this happens, you place your estate in the hands of the law and your business is subject to the intestacy rules.
If you’re a sole trader or a majority shareholder and you die unexpectedly without a will, your shares and business will end up being inherited by whoever the court deems responsible, i.e., the Executor. This person may be after a quick sale and could lack the experience need to carry on trading.
However, if you made a will, you would avoid this from happening by nominating an Executor whom you trust to handle your business with care and according to what’s stipulated in your will.
Your family are left to pick up the pieces
It’s a time consuming, expensive and stressful experience. The process of settling an estate under intestacy can put personal relationships under strain and, for the most part, there’s a discrepancy between what the law and family involved consider to be fair, resulting in an outcome far from what you would have wanted.
It’s a real concern to think about your business being controlled by someone without the knowledge to understand the affairs of your trade. The business could be sold or fall apart due to poor management while the people you intended to look after, have no control over the outcome.
A will ensures your beneficiaries have the means to continue with the business and help it grow to a stage where they would get more money if the need to sell arises in the future.
Inheritance Tax liability
If your business is added to the overall value of your estate, your Inheritance Tax liability will be hefty for your beneficiaries. Inheritance tax planning is an area you need to carefully consider when planning your will. It’s possible to pass your business into a trust to ensure more money goes towards your loved ones rather than the taxman’s pocket.
It’s worth seeking advice on whether a trust could benefit your specific circumstance and requirements.
Take a moment to consider the burden of not having a will in place and ask yourself if you can really afford not to as a business owner. With the help of a professional will writer, it’s truly an easy and straightforward process. If you need any assistance in setting up your will, give us a call and we will take you through it from start to finish.
For more advice and tips on Wills and Probate, to protecting your wealth, speak to one of our advisors on 020 3745 7271 or email info@carterbondwills.co.uk
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