With over 400,000 SMEs in Yorkshire and Derbyshire, and around two-thirds of UK adults with no will, a lot of business owners are leaving their fellow business partners and family vulnerable and are risking loss of business continuity.
Even if you have already made a will, are you sure it covers arrangements for your business and its assets? Have you planned what will happen to your business assets/shares? Who will they pass to? Do any of your other business agreements conflict with your will? Will inheritance tax be payable on your business assets
You can only have one valid will, but, if you own a business, making sure it is a business will that covers these issues is vital.
You can leave shares or business interests and assets to whomever you wish, but you need to take care that the proposed beneficiary of those business assets would actually want them, know what to do with them and how to do it. You may not wish to leave such assets to your family if they don’t want to, or can’t continue to, run and manage your business. If you want your company to continue after your death, you need to ensure that it is left in the hands of someone who can maintain control.
You need to ensure that any bequests in your will don’t conflict with the provisions made in other business agreements, such as shareholder agreements, partnership agreements or articles of association. Such agreements might limit how your business can be managed after your death, and how your business interests can be inherited, so you need to take expert legal advice to avoid disagreements after your death.
Inheritance tax is an issue that concerns many business owners, but there are ways of ensuring that it is minimised. Some business assets are subject to an IHT relief, such as business property relief (BPR), which could mean that they do not attract IHT, no matter who they are passed on to as long as they remain business assets. You can also gift business assets that attract BPR to anyone during your lifetime without them being subject to IHT.
Issues relating to what happens to business assets that are sold after they have been inherited are complex and can lead to subsequent beneficiaries of an estate having to pay substantial amounts of IHT, so proper legal advice is vital.
You can leave your business assets in a trust if you want the people to whom they are left, such as family members, to maintain an interest in the business, and its value, but not to have to deal with the everyday running of it. A trust can also relieve any issues where there might be conflict between a person’s will and other business agreements. Using business trusts can also eliminate liability for IHT, as long as they are drafted properly so again, you should take advice from a solicitor who is experienced in this field.
Head of Graysons’ private client team and partner, Anne Rogers, is a highly experienced wills, trusts and probate solicitor, who can help you to ensure that your family and your business are protected in the future. Contact Anne now to make an appointment.
Author: Anne Rogers, partner, head of private client department and specialist in wills, trusts and probate.