Making a will? What will happen to your business?

by Iain Mason

When we think about making a will, we naturally think of what forms part of our estate. Our home, other properties, our possessions, our savings and investments are automatically taken into account.

But if you own a business, what happens to this? Does your business form part of your estate in the same way that your home does?

Business succession planning

Many people assume that all they need is a will and that their will covers everything, including business assets. This is not the case.

When you die, your business assets do not automatically form part of your estate by law and you really must include them in your will.

Depending on whether you are a sole trader, a director in a limited company or a partner in the business (and depending on various other circumstances) the way you deal with succession planning will be very different.

What you can do, however, is put plans in place during your lifetime which outline what you would like to happen to your business in the event of your death, particularly if you are a sole trader and the business is unlikely to be able to continue without you.

Here are some steps you might consider taking:

• Have drawn up a Power of Attorney, which will help ensure your business can continue to function effectively should you lose capacity. This could be important in ensuring continuity and to avoid losing clients or staff.
• If your business is a limited company or partnership, you should carefully check the details of all company documents and the partnership agreement to make sure there is provision on death. If you do not have a partnership agreement it is recommended that you arrange for one to be drawn up as soon as possible.

There are many elements to take into consideration when making a will, and the fact that your business does not automatically form part of your estate is an important consideration.

If you want to talk about making a will, or succession planning for your businesses, please get in touch with the legal team here at Optimum Professional Services.