Following on from Heidi Berry’s recent video regarding writing a Will with Price Bailey, we delve deeper into what business owners should consider when writing one.
As a company owner, you should create a Will to ensure that the right people are taking on the responsibility of the business, along with business assets and/or shares. If a business owner or business partner fails to write a Will, it can leave behind a difficult situation for family and others involved in the business.
Firstly, you should know why your business’s structure will determine how your estate is passed.
For sole traders, your business will effectively come to an end when you pass, with your assets passing in your estate – either in accordance with your Will, or, with the rules of intestacy.
If you have a succession plan in place and want your business to continue trading after you pass, you may also be able to leave your company as a gift to a specific person, or people.
As a partner in a firm, you can decide what will happen with the financial value of your partnership.
Understanding your documentation is important, as some may believe they are passing on a career to a family member when actually company documentation may prevent this.
Another thing to take into consideration is whether the terms of your Will are going to affect the majority shareholding and whether these are changes that you want. Ask yourself, if you are planning on leaving shares to a family member that has an interest in the business, are you happy for them to be the controlling shareholder? Or is it best that two family members have an equal shareholding?
As a business owner do I need to do anything to prepare for writing a will?
When talking with a solicitor make sure to bring all-important paperwork with you including;
- Shareholder agreement, or
- Articles of Association, or
- Partnership agreement
If these documents do prevent passing on assets to someone of your choosing, we would suggest reviewing that paperwork, as amendments can be made allowing your wishes to take effect – providing your fellow partners and shareholders agree.
You may also want to consider having a valuation of your business to hand, in order to understand the current worth of the business property or assets which form part of your estate. This may help you to apportion value between your chosen parties and it can also be a useful starting point for tax planning considerations.
Another thing we would ask you to consider is whether those assets are part of the business or are yours personally. Many people accidentally intermingle the two and think they are passing shares in a property for instance that is a business asset when in effect it is instead owned by you personally.
At Price Bailey, our Will writers are members of the internationally recognised Society of Trust and Estate Practitioners (STEP), and also hold advanced certificates in Will writing. We also have access to qualified accountants, solicitors, and tax advisors, which is crucial in particular for larger and more complex estates. If you would like advice or support writing a Will, you can contact Heidi Berry, our Director of Legal Services at Price Bailey.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.