Expert Wills Solicitor, Thomas Evans TEP, answers the top ten most popular questions he is asked about making a Will for Business Owners.
- What happens to my business interests if I don’t make a Will?
Not making a will could spell disaster for the continuity of your business, especially if you are a sole trader. If you want to give someone the opportunity to run your business once you’re gone, it really is best to plan ahead.
- Do I need a separate “Business Will” to deal with my business interests?
There is no such thing as a “Business Will”. One Will, drawn up by a suitably qualified solicitor, should deal with all of your assets – both business and personal.
- Who will be responsible for the continuity of my business immediately after my death?
If you are a sole trader then your executors will be responsible for running the business until it is transferred by them to your chosen beneficiary. It could take your executors many months to reach this stage, so it is vitally important to ensure you appoint the right people as executors to handle the business transition.
- So who should I appoint as my executors?
Your executors should, first and foremost, be people who you can trust implicitly to handle your estate. However, when leaving an interest in a business, you should also consider whether it would be appropriate to appoint someone with a degree of familiarity with your business to ensure that it is run effectively immediately after your death. You may, for example, want to consider appointing a trusted advisor, such as an accountant or solicitor, as an executor.
- I am a partner in the business, what will happen to my partnership interest?
This will depend on what your partnership agreement says. Partnership agreements are typically drafted in a way that gives the other partners of the business the option to buy your interest before your executors sell or transfer it to anyone else. For that reason, it’s important to be sure that your Will and the partnership agreement “work together” to avoid any confusion after your death. If you do not have a partnership agreement in place then this is something that should be considered at the same time you make your Will.
- I own shares in a company, can I leave my shares to anyone I choose?
The answer to this depends on what the articles of association and shareholders agreement say, so these documents should be checked at the same time as you make your Will. Even if you’re allowed to leave your shares to whoever you choose, you still have to think very carefully about whether your chosen beneficiary has a genuine interest in the business and the degree to which they might want to be involved in it after your death.
- Do I have to use complicated trusts to deal with my business interests?
No, but trusts can be useful for both succession and inheritance tax planning reasons. For instance, they can be used as a way of ensuring that your business interests pass into the hands of the right people and at the right time. Yes, trusts can be complicated, but it’s the job of your solicitor to explain their potential benefits to you in a straight forward way.
- How easy is it to make a Will in the current pandemic?
I am finding that most clients are very comfortable discussing their affairs and giving instructions over the phone or through video calls. In most cases, the process is actually more convenient, as it doesn’t require a trip out to see the solicitor. Draft Wills can be sent to clients in the post or by email, and step by step guidance is given on how the finished Will should be signed.
- Is there anything else I need to consider?
As explained above, if you are a partner or shareholder in a business it is vitally important to check the terms of any agreements that you may have already put in place that could govern the way your business interests pass on your death. If you don’t have anything in place or are not sure about what has been drawn up previously it makes to discuss this with the solicitor making your Will.
- Do I need a Lasting Power of Attorney (LPA) specifically dealing with my business interests?
As a business owner, it’s important to consider what would happen to your business if you were unable to make decisions. If you’re a partner or a director in a business, a review of any business agreements already in place will determine whether a separate “Business” LPA is appropriate or necessary. If you’re a sole trader, you might not necessarily want a relative, who may not be familiar with how your business is run to have the responsibility and the stress of making decisions concerning both your business and personal assets. This is certainly an option worth considering.
If you have any other questions about Wills or LPA’s for Business Owners, or would like to go ahead with preparing a Will, please do call Thomas or one of his colleagues on 01562 820181 or email firstname.lastname@example.org
This article was originally written for Herefordshire and Worcestershire Chamber of Commerce and published to their website. You can visit the article here. https://hwchamber.co.uk/as-a-business-owner-do-you-have-a-will/
mfg Solicitors LLP are proud Patrons of Herefordshire and Worcestershire Chamber of Commerce.