A Business Owner's Will
 

   Certain tools can be used within a Will towards protecting the longevity of a business owned by the testator, if that is their wish.
 

   A person's Will governs the distribution of all of their property, including any business assets. Two examples of business assets are a business that had been carried out by the person as a self employment and shares in a private limited company.
 

   Where business assets are to be included within a Will, we recommend that firstly you consult your accountant to discuss valuations and tax matters. 

   Effective succession planning when it comes to a business could potentially save time, hassle and money.

   We request and review any relevant documents, such as Land Registry title documents in the case of a rental property owned by a limited company, company Articles of Association, and any shareholder's agreement or partnership agreement.

   The Will of a business owner who is married might include a Business Property Relief Discretionary Trust. In that case, the Trust will own the business rather than the surviving spouse. Should the business be sold whilst the surviving spouse is alive, the proceeds of sale would belong to the Trust.
 

    A letter of wishes is usually drafted to state that the surviving spouse is to be treated as the main beneficiary of the Trust whilst they are still alive. Upon their death, the letter of wishes could either direct that the Trust be wound up and assets distributed to the beneficiaries or that it continue to run to protect assets for beneficiaries.

   In the absence of a Business Property Relief Discretionary Trust, the business owner's Will might state that they want the business to be sold and indicate the person(s) to whom the sales proceeds would go. 

   If the business owner's Will states that the testator doesn't want the business to continue after their decease or wants the business to be sold, the necessary steps would be taken by the executor who was appointed in the Will. For example, the employees of the business have to be taken care of in accordance with the relevant legislation, customers should be notified, outstanding bills should be settled and any tax liabilities should be paid.  

   If the business owner would like the business to continue, planning has to be carried out to ensure that the person(s) that they would like to inherit the business can do so in a relatively smooth transition.
 
   There should be continuity plans in place in relation to the staff of the business.
 

   The matter of who the business owner would like to inherit the business should be carefully considered before the drafting of the Will. Is the person they want to inherit the business suited to run the business alone? If not, is there someone that can help them? If the business owner acts as a business mentor to their chosen successor, it is more likely that when their successor inherits the business, they will run it in accordance with the original owner's business policies and goals.

   For information about including a business within a Will that is tailored to your particular circumstances, please contact us.