It is likely that your business is one of the most valuable assets, so it’s important that you have plans to leave your shares or business in safe hands following your death.Start Now
Whether you run your own family business or own shares in a multi-national corporation, this is included in your estate. It is likely that your business is one of the most valuable assets, so it’s important that you have plans to leave your shares or business in safe hands following your death.
Including plans for your business in your will ensures that the responsibility is left with the right person, without the risk of damaging the business or losing your shares.
By hand-picking exactly who you’d like to take over control of your business, both your beneficiaries and the business itself are able to benefit – your business will gain a capable new owner, while your beneficiary will have the opportunity to flourish as the owner of a new business.
When it comes to writing a will, deciding what will happen with your business is arguably one of the most complicated, but important aspects – that is why our expert advisors are always on hand to offer the very best advice for you and your business.
As the owner of a business, you’ll know better than anybody the importance of business succession planning – but how does it relate to writing a will?
Without a succession plan, your business is at extreme risk in the event of your retirement, an injury or illness or, in this case, death – there are numerous questions you should ask yourself when planning for the long-term future of your business, including:
If your business is family-run then success planning is even more important. At an already traumatic time, the last thing your loved ones will need are disputes over how the business should go forward without you at the helm – even if the business isn’t worth a great deal financially, it could be of great sentimental value to those who watched you build it.
Your succession strategy should be set in stone and discussed with any potential beneficiaries before writing your will, so to avoid the business being handed over to somebody who either doesn’t want or feels that they are not capable of taking on the responsibility.
You’ll know better than anybody what the role will entail, so there is no better person to find a new owner for your business than yourself. If circumstances allow it, try to train your chosen beneficiary on the day-to-day basics that come with being a business owner; this will not only make the handover process a lot easier but also give them peace of mind in knowing that they have at least a rough idea of what to expect should they need to step into your shoes.
Given the financial elements involved in handing over a business, it is important for your loved ones to know exactly why you’ve made your decision – this is the purpose of a letter of wishes, which our partner solicitors can help you to perfect.
An entirely confidential document, a letter of wishes is usually less formal then the will itself and outlines the decisions you have made, why you have made them and any guidance you have for beneficiaries. Unlike a will, anything stated in your letter of wishes is not legally binding, however, it is expected that your loved ones will do their best to fulfil your requests.
Your business is part of your estate, meaning that the inheritance tax on a family business is combined with other assets like your house, car, savings and investments – your loved ones will be required to pay 40% tax on your estate’s value beyond £325,000 which could decrease the value of your estate by hundreds of thousands of pounds.
Luckily, there are legal ways in which you can reduce (and sometimes eliminate) this tax, so it is important that plans are put in place in advance.
You can get tailored advice on reducing the impact of inheritance tax by contacting us via our online form, or alternatively find out if your beneficiaries would be able to claim for business relief.