29/06/2023 by Northwood Banks & Co
Own a Business? You Might Want to Think About Your Will
Who will take care of either running the business or winding it up when you pass on?
As you will already know, a Will is a very important document and is vital to Estate Planning and ensuring that your assets are handled according to your wishes when you pass away. However, there are still a lot of people who feel that they don’t need a Will, for example because they are young. In some instances, many people wait until a certain event makes them realise just how much they do need a Will.
Making a Will ensures that the loved ones you leave behind have clear instructions in regard to your wishes.
Planning Succession For Your Business In A Will
If you own a business, then it is even more important to prepare a Will. Think about what would happen to your business if you passed away? Who would take care of it, who would manage it and what would actually happen to your clients and any employees?
The following are a few key points you need to think about:
Running the Business - Who would take care of either running the business or winding it up in when you pass on? Would your children or spouse step in and are they be able to cope? It is a big responsibility and is something that they may not want or there might be someone you would prefer to run it for you. If you don’t have a Will, this might not happen.
Inheritance Tax Planning - When it comes to Inheritance Tax Planning, there are certain things you need to consider if you own a business, such as whether your business qualifies for business property relief. Ensuring your Will is drafted in a tax efficient way could save your loved ones an unnecessary tax bill later on.
Company Shares - You might own shares in a company that are subject to pre-emption rights and you may have a cross option agreement in place in respect of this.
Sole Trader - If you are a sole trader then you might need to consider the effect of your death to your business as it will immediately terminate when something happens to you.
Business Interests - You might not realise but your family might not want to be involved in your business and may want to sell any shares they inherit. Do other shareholders in the business have the ability to buy these shares?
Life Cover - You will need to think about life cover as you will need an adequate amount of cover to provide for your loved ones and also make sure that there are funds available to shareholders to purchase the shares from your estate.
The above show that it is not only vital to get a suitable Will in place but to also ensure you seek advice from a professional.