Have you given any thought to what will happen to your business if something happens to you?

Nobody wants to think about their own mortality, but we have to accept that we are faced with risks on a daily basis. This could be anything from driving to work, tripping over literally anything, or a sudden unexpected illness…

There is a lot of confusion about what to do to ensure the continuity of a business, but when it comes to it, it’s really quite simple.  Firstly it depends on how you own, hold or run the business:

Sole Practitioner – A gift of the business can be made in your Will stating the beneficiary you wish to inherit. It might also be prudent to appoint the beneficiary as the Executor relating specifically to the business assets, and include the powers in the Will to enable them to continue to run the business from the time of your death, to avoid the complications that delays caused by Probate would have.

Partnership – Every Partnership should have a Partnership Agreement in place, if the business is intended to survive one of the partners.  Before making a gift in a Will, it will be necessary to check the terms of the Partnership Agreement, as it may confirms that a surviving partner can purchase the deceased’s share.  In addition, there could be tax implications regarding business property relief, so professional advice should be sought. 

Incorporated – Similar to a Partnership, a Ltd Co should have a Shareholders Agreement, to sit alongside the company’s Articles of Association.  These documents need to be checked to ensure any gift of shares in a Will does not conflict with the conditions set out in the company documents.

If you intend for your business to continue then planning needs to be done upfront, to ensure that the person or people you would like to inherit your business can do so. At the same time you should also consider the continuity plans you need to have in place if you employ staff.

If you don’t want the business to continue, then some necessary steps still have to be taken. Employees need to be taken care of, customers need to be notified, outstanding bills need to be settled, and any taxes need to be paid.  You can get more information on closing your business from the GOV.UK website.

Who would you like to inherit the business? This should be carefully considered before writing your Will. Is the person you want to inherit the business able to run it?  If not, is there someone that can help them?  Will they run the business in accordance with your business ideals?  What is their financial position like?  Are they likely to damage the reputation of the business?  Or would you prefer the business to be sold and the money to go to someone specific?

Heir Tight Wills helps clients put in place robust provisions and valid documents, to protect their loved ones and their personal and business assets, both during their lifetime and after their death.  For a FREE Consultation to discuss writing or updating your Will & estate planning provisions, contact Rachael Rodgers on 0845 519 7585, or CONTACT US via email.