Running a business involves the use of your skills, your judgement and planning. So you can achieve your business goals. When thinking of your Will and how to deal with your business interests think about these questions:

What would happen to my business if I died tomorrow ?
Who would then make decisions about the business?
Would the business need to be sold?
Can I leave my business to someone through my Will?

Your circumstances coupled with the business structure will largely dictate the answers to these questions.

Sole Traders
As a sole trader you are often the key person of the business with knowledge, skills and experience that cannot be replaced. Without you does the business has a value in terms of physical assets and goodwill that would allow the business to be sold as a going concern. If not the only realistic option may be for that the business is wound up and any monies realised as part of the estate.

Other possibilities might be to ‘bring on’ an employee to purchase the business on such suitable terms that suit each party. Your Will can be drafted to achieve your wishes and if necessary by giving special powers to Trustees to accomplish your wishes. Remember to check leases and contracts within the business in particular the ‘in the event of your death’ provisions. There may be penalties and restrictions on the rights to assign.

Partnerships
A Partnership position cannot be passed on in a Will. However, you can leave the financial interest you have in the Partnership. Without a Partnership Agreement (“PA “) the death of a partner dissolves the Partnership and the firm is then wound up with the applicable proportion of the capital and income passing to your estate.

Consider the possibility that at the time of death there may actually be more liabilities than than capital which would leave the estate potentially liable for any debts under the doctrine of joint and several liability. So if death occurs at a time when liabilities exceed the capital in the firm there may nothing to leave and outstanding debts would be payable from your estate as the liability is against the individual Partners and not the no longer existing Firm.

Best advice is to have good insurance cover to pay off the the financial interest on the death of a Partner. AND to have a formal Partnership Agreement which spells out, amongst other things, the procedures in these circumstances.

Best practice is for each partner to have a Will and a Partnership Agreement so that you can ensure that your family your and surviving business Partners benefit from a considered and planned settlement of your business affairs. Just as important is that a surviving Partner will enjoy the protection afforded through your foresight and planning.

A Shareholder in a Limited Company
A Limited Liability Company has a separate identity distinct from the shareholders who own it. The Articles of Association of the Company set out the rights of Shareholders including the rights a shareholder has to dispose of his shares. Quite often there is a requirement to give other shareholders an option to purchase upon the death of a shareholder. There may be an option to leave shares to specified family members e.g. Spouse and children.

By ensuring the Articles of Association are suitably drafted you can achieve the desired succession arrangements in your Will. The importance of the distribution of the shares after death is clearly more important if it involves a major shareholding.

In conclusion, if your business is capable of continuing you need to ensure that the necessary permissions and restrictions are dealt within advance and that you have well drafted Will.Otherwise it may well not survive after your death and serve to an extra layer of problems to what would surely be a difficult enough time for your loved ones.

If you would like to talk more about Estate Planning in relation to your business please contact Bill Ryan g the contact page or call FREEPHONE 0800 878 6565 or 07942 959599.

The home/business visit Will service is available in Berkshire, Dorset, Gloucestershire, Hampshire, Oxfordshire, Somerset and Wiltshire.