Mander Hadley Logo

Coventry

Mander Hadley Solicitors in Coventry 024 7663 1212

Kenilworth

Mander Hadley Solicitors in Kenilworth 01926 857631

Cover all
  the angles

Related links Down Arrow

Make an enquiry Down Arrow

Read more articles in: Blog, Mander Hadley, News, Private Client

Avoid problems passing on your business with a proper Will

Neglecting to write a Will can be costly for those wishing to pass on a business after death.

Here, David Webb, Mander Hadley’s Director and Head of Wills, Probate & Older Client Services, explains why it is important for business owners need to give careful consideration to inheritance planning:

Dying intestate or without a properly constructed Will is a potentially costly problem. It could mean that your estate has to pay a substantial amount of Inheritance Tax, which with proper planning could be avoided.

It might and often is the case that business interests and assets are eligible for Inheritance Tax relief, and can pass with no tax liability attaching them.  This is not however universal; far from it. A business has to qualify for the relief.  Furthermore a proposal to scrap the business property tax relief has long been on the agenda at the Treasury, so it might not be something you cannot rely on in the future.

Wills are often pushed to the bottom of the ‘to do’ list, particularly when you are busy juggling home life and running a business. However, companies should think about what would happen to the business if the worst happened and to put their ‘house in order.’

Without a Will, your business or your shareholding could pass to:

  • Someone who has no interest in running it
  • Someone without the skills or experience to run it properly
  • Multiple people in conflict about how the business should be run.

In any of these cases, the business could lose value due to mismanagement. It might also simply be sold off quickly at a bad price.

Whether you are a sole trader, partner, director or shareholder of a company, a properly constructed Will allows you to:

Appoint somebody to continue the business for you

Executors can be appointed to ensure continuity in the running of the business. You can choose someone with the experience and skills to do so.

Ensuring the right people inherit your business

If you die without a Will, the intestacy provisions set out who should inherit, with some surprising results. For example, if you are married, it is not necessarily the case that your spouse will inherit all of your assets.

Help mitigate tax through business property relief

Business property relief could mean your business receives a 100% tax break, providing the business meets the set criteria.

When reviewing your Will, remember to review the structure of your business and the relevant business documents at the same time. Make sure that you know what would happen to your share of the business upon your death and consider changing this if it does not reflect your wishes.

If you are in business with others, either via a partnership or company, it may be worth checking if your co-business owners also have a Will in place, as this may have an impact on your business if the unexpected happens.

A partnership agreement should be in place, especially if you want the partners to have the option to buy your interest and continue the business.

Wills come into effect on death and it is equally important to ensure you have a Lasting Power of Attorney (LPA) in place whilst you are alive to ensure the running of the business if you were to lose capacity.

Having an up-to-date Will and LPA in place could have a huge impact and will provide peace of mind should anything happen in future.

The purpose of an LPA is to meet the needs of those who can see a time when they will not be able to look after their own personal, financial or business affairs. The LPA allows them to make appropriate arrangements for family members or trusted friends to be authorised to make decisions on their behalf.

For help and advice with related matters, please get in touch with our expert Wills and Probate team.

Mander Hadley

Mander Hadley Solicitors is not only a long established firm, but is vibrant and successful, with a forward thinking approach.