When writing a Will, personal assets such as houses, cars and cash tend to spring to mind. However, a will can also ensure your business assets and investments also go to the desired people after you pass.
In the UK, the number of people who don’t have a Will is at an all-time high, with over 60% of people without a Will. In the long run, not having a Will can add extra stress to your close family and friends. In addition to this, where a deceased individual has a Will that is difficult to interpret or no Will at all, disputes could arise.
If you’re a business owner, it’s important that you’re aware that the value of your business will be considered part of your estate when you pass. Moreover, in this article, we’ll be looking at the ways in which writing a Will can protect your business assets. This should help prevent the likes of contentious probate lawyers, like IBB Law, from needing to get involved.
What is a Will and How May it Affect Your Business?
A will is a legal document that expresses an individual’s wishes as to how their money, property and possessions are distributed after their death. It also dictates which person is to manage the assets until its final distribution. If you make a will, you can also make sure you do not pay more Inheritance Tax than you need to.
It is a good idea to have a will if you’re a business owner as it lets you decide who the business is passed onto, as well as the ability to pass on shares to loved ones. Without a will, a business may be passed onto someone who lacks the skills or experience. In a worst-case scenario, your business could lose value due to mismanagement.
5 Ways Writing a Will Can Protect Your Business
From reducing the likelihood of disputes arising to ensuring your loved ones receive the correct inheritance, below we’ll take a look at five ways writing a will can protect your business…
1. Protecting Company Payments
As we’ve previously stated, having a clear and easy-to-read Will can reduce the likelihood of disputes arising. This can be particularly important when you’re a business owner, as if a disagreement over the division of your company assets was to occur, your assets could be frozen for some time.
This may, in turn, mean that the business is not able or permitted to make important payments. In addition to this, if you were a small business owner and your close family were reliant, a freeze in payments could make things difficult for them.
2. Negating Unsuitable Leadership
When you’re a business owner, it’s important to think about who will be most suited to run the business in the event of your death. If this information is not included in your Will, this may result in an employee who is not experienced enough or doesn’t have the correct leadership qualities, taking over the running of the business. In worst cases, this could lead to a reputational loss for the company or your business even losing value due to mismanagement.
3. Inheritance Tax
If you do not include your business in your Will due to poor planning, your beneficiaries may end up paying the maximum possible amount of inheritance tax. In worst cases, your executors may even have to sell business assets, shares or interests in order to pay a substantial amount of inheritance tax. And in other cases, your business interests might be eligible for Inheritance Tax relief.
For this reason, it’s incredibly important that you remain aware of the true value of your business and that you consult with a tax specialist to ensure that your beneficiaries don’t end up with a huge tax bill.
4. Delegating Company Shares
If you own shares in a company and fail to divvy these up officially in your Will, there’s a chance that your shares will end up in the wrong hands. If you don’t include these in your Will or you die without a Will, the court will first award these shares to a living spouse. While this is usually not a problem, it can become tricky in some instances. For instance, if you are separated but not yet divorced, your spouse may still inherit your assets, including company shares.
5. Maintaining Control
If you decide to include business assets in your Will, in some ways you may be able to retain some control over the future of your business. For instance, you may want to include clauses that specify which changes can and cannot be made to the company, as well as who will take over certain responsibilities. This can be important in protecting the integrity of the business that you have worked so hard to build.
Protecting Your Business Assets
Thinking about what might happen once we’re no longer here is often an uncomfortable feeling but also a necessary one. Failing to write a Will or, failing to include business assets in your Will can cause distress to your grieving loved ones.
And in the worst-case scenario, not having a Will can result in your business not doing as well as you pleased.
By writing a Will, and including your business assets in your Will, you’ll be able to decide who the business is passed down to. Writing a Will can also reduce the likelihood of disputes arising over shares and the division of assets – something which could prove detrimental to the business if not specified in the Will.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a Wills and Probate lawyer/solicitor if you’re seeking advice on Wills, Trusts and Probate. We are not liable for risks or issues associated with using or acting upon the information on this site.