The importance of writing a Will if you are a business owner
One of the most important parts of any business – whether a partnership or sole trader – is making sure that you have a Will in place, stating how you wish the business to be administered in the event of death.
Failure to put this in place will result in your business falling under intestacy rules; meaning that your business will be administered according to UK intestacy law, rather than how you may have envisaged or wished for it to be done on behalf of your beneficiaries and family.
Not only will this result in a delayed and protracted process – meaning it will take longer for your family to access the equity in the business, at a time when they will probably need it most – but it will almost certainly result in your family receiving less money than if you had had a secure and well thought out Will in place before your death.
For example; without a Will your business will be sold by whoever the court deems responsible under intestacy rules, i.e. the Executor.
At worst, this could be someone you have no wish to see dealing with your estate. Or, it could be that the Executor simply does not have the experience, contacts or knowledge to realise your businesses’ maximum value.
Through a professionally written Will you can nominate the Executor yourself; someone who you know and trust, and who can value your business accurately and distribute it effectively, according to the terms of your Will.
You can also use your Will to ensure that your beneficiaries are able to use other assets in your estate to support the business and allow it to carry on trading.
Above all this could remove the pressure for a quick sale and help them get a better price for it further down the line.
The other main are of consideration is Inheritance tax planning. With sensible planning it is possible to make sure that the value of your business passes into a trust rather than having it added on to the overall value of your estate.
This will reduce your Inheritance Tax liability and ensure that more of the money goes to your family rather than the taxman.
Finally, as a business owner, you should really make sure that you have a Lasting Power of Attorney in place. This will allow you to nominate a person of your choosing to act on your behalf if you get injured or become too ill to work.
This means that they can access accounts, make payment and deal with all those other crucial elements of the day to day running of your business.
Setting one up is a straightforward and relatively quick process, but the benefits are often invaluable.
It may all sound like a lot to consider, but getting a Will in place really is as simple as having a couple of meetings with a professional Will writer and letting them take your instructions.
When you consider all the pitfalls of not having it place, you should really be asking yourself if you can genuinely afford not to.