Do you know who will inherit your business or shares after you pass away?
Effective Will writing can help to make sure your wishes are carried out exactly as you intend – and prevent your business interests from passing to someone unsuitable or someone who is not equipped to handle it. Simply put, a well-written Will can alleviate your worries about what happens to your business after you pass away.
If you don’t have a Will in place, or your Will doesn’t include clear instructions about your business interests, the consequences could include your business or shares:
- Passing to someone who doesn’t want this responsibility
- Passing to someone who doesn’t have any relevant skills or experience
- Being the cause of conflict between multiple people who disagree about how the business should be run
- To cease trading automatically, which can have significant consequences.
Why you need a Will
The absence of a comprehensive Will tailored to address your business interests can have far-reaching consequences.
Not only can its absence cause the aforementioned problems, but if you have a Will without clarity, it may trigger legal complexities and delays in the probate process. This could lead to prolonged periods of uncertainty for your business and create opportunities for disputes or external challenges to the distribution of your assets. Without a Will, the distribution of your assets will be determined by intestacy laws, which may not align with your wishes or the needs of your loved ones.
Wills and Shareholder Agreements
It’s important to know that if you don’t have a
shareholder agreement in place, then upon your death the shares in the business get inherited by your estate.
This means potential inheritance tax implications, not to mention a decision must then be made as to whether the estate keeps the shares and gets to vote and run the company, or sell them. I’ve seen so many issues and conflicts over the years that are unavoidable with a well-drafted shareholders agreement in place.
Shares in trust
If you want put shares in trust for your next generation, your business owner’s Will is the key to achieving this objective. By establishing a trust through your Will, you can ensure that your shares are passed on to designated beneficiaries according to your wishes.
Shares in trust offers several benefits. Firstly, it provides a structured mechanism for transferring ownership of the business to your chosen heirs . You can specify the exact conditions and restrictions on how the shares are managed or distributed. This ensures that your business legacy continues in alignment with your values and objectives. This route can also help mitigate potential inheritance tax liabilities, as they are effectively removed from your estate upon your passing. This strategic estate planning approach can optimise tax efficiency and preserve more of your wealth for future generations.
Lastly, placing shares in trust provides a level of protection and stability for your business, as it safeguards against abrupt changes in ownership that could disrupt operations or strategic direction.
Next steps
It will be very difficult for someone to restart or continue your business if you don’t make a Will. If you want to give someone the opportunity to run your business once you’re gone, it’s essential to plan ahead. By specifying succession plans, appointing key personnel, and outlining strategies for business management or sale, you can safeguard the future of your business and protect the interests of employees, partners, and stakeholders.
I can help you –
get in touch today for expert and impartial advice on drafting your business Will. It’s a really important, proactive step to get right.