What happens to your Business when you die?
When it comes to including your business in your will, having a well-thought-out plan is crucial. This Business Assets Will Help Guide provides comprehensive information on ensuring that your business affairs are appropriately addressed in your will.
With approximately 5.7 million businesses in the UK, ranging from small sole traders to large corporations, it is essential to assert your preferences regarding the fate of your business after your passing.
Owners of limited companies
For owners of limited companies, the memorandum and articles of association outline the company’s purpose and operation. It is crucial to review these documents when drafting your will, as they may dictate the fate of your business after your demise. If the articles of association specify the business’s fate upon death, these provisions typically override any instructions in your will. In cases where such specifications are absent, legal advice can help you include your business in your will.
Sole traders
For sole traders, the process is relatively straightforward, as assets used for business purposes are personally owned. These businesses can be included as part of your residuary estate, with distribution among beneficiaries according to your preferences. If you wish to leave your sole trader business as a specific gift, seeking additional legal advice, preferably through face-to-face consultation with a local legal provider or solicitor, is advisable.
Partnerships
Partnerships, governed by formal partnership agreements, determine the destiny of your share in the business in the event of your death. This agreement takes precedence over any will instructions. Limited liability partnerships, on the other hand, rely on LLP agreements or LLP members’ agreements to ensure business continuity. Familiarizing yourself with these terms before incorporating your business into your will is recommended.
Leaving your business as a gift
Leaving your business as a gift to specific individuals might be an option for sole traders or sole directors of limited companies, particularly if you have a succession plan in place. For detailed guidance on how to include your business in your will, it is recommended to consult a local legal provider or solicitor face-to-face.
When to Seek Legal Advice – Business Assets Will Help Guide
Legal advice may be necessary in various scenarios, such as understanding or establishing agreements governing your business, leaving your business as a specific gift, incorporating provisions in your will for business entitlements, managing inheritance tax for large estates, or owning a farming business. Seeking professional guidance ensures that your wishes are appropriately documented and legally sound.
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