When drafting a will, it’s easy to focus on personal assets—your home, car, savings, and sentimental belongings. However, if you own or hold an interest in a business, this is one of the most critical assets to consider. Whether you’re a sole trader, in a partnership, or own shares in a company, failing to address your business interests in your estate planning can create unnecessary stress for your loved ones and jeopardise the continuity of the business itself.
In this article, we’ll explore the key considerations for including business interests in your will, and why engaging experienced wills solicitors is vital to navigating this process effectively.
Identify Your Business Structure
The first step is to clearly understand how your business is structured. Is it a sole proprietorship, partnership, trust, or company? Each of these structures has different implications for how your interest can be passed on through your will.
· Sole trader: You personally own the business and its assets, so you can include them directly in your will.
· Partnership: Check your partnership agreement. Some agreements restrict the ability to transfer ownership upon death.
· Trust: Business assets held in a trust are not part of your estate but may be controlled through your role as trustee or appointor.
· Company: You can include shares you own in your will, but not the company itself.
Understanding your structure allows your solicitor to determine what can be included in your will and what must be handled through alternative estate planning tools.
Review Operating Agreements and Legal Documents
Many businesses have shareholder agreements, partnership contracts, or trust deeds that dictate what happens if an owner dies. These documents may include:
· Buy-sell agreements: These can specify that remaining partners or shareholders have the right (or obligation) to buy your share of the business.
· Succession clauses: These may limit who can inherit or control the business interest.
Before finalising your will, review these documents to ensure your intentions align with any legally binding provisions already in place.
Consider the Needs of Your Beneficiaries
Leaving a business interest to a spouse or child may seem straightforward, but is that person capable (or willing) to run the business? If not, this can lead to financial loss or legal complications. Instead, you might:
· Appoint a professional manager to run the business on behalf of beneficiaries.
· Arrange for the sale of the business interest, with proceeds distributed via the estate.
· Leave shares or interests to multiple parties with clear guidelines around voting rights or dividend access.
Effective planning balances the needs of your family with the practical realities of operating the business.
Plan for Business Continuity
A comprehensive estate plan ensures the business can continue operating with minimal disruption. This may include:
· Identifying and training a successor.
· Establishing enduring powers of attorney to allow someone to make business decisions if you’re incapacitated.
· Ensuring key documents, passwords, and contacts are easily accessible to the right people.
Without these measures, your business could face delays, client losses, or operational issues during probate.
Tax and Valuation Implications
Passing on a business can have significant tax consequences for your estate and your beneficiaries. You’ll need to consider:
· Capital gains tax (CGT) on business assets.
· Valuation of business interests for probate and potential disputes.
· Whether the small business CGT concessions apply to reduce tax liabilities.
A wills solicitor working with your accountant or financial adviser can ensure your plan is both tax-efficient and legally sound.
Keep Your Will Up to Date
Your business interests may evolve over time. You might sell assets, take on a new partner, restructure, or expand into different markets. Any such changes should trigger a review of your estate plan. Regularly reviewing your will with your solicitor ensures that your business assets are accurately represented and that your legacy is preserved according to your wishes.
Including business interests in your will isn’t just about dividing up assets—it’s about protecting your legacy, your employees, and your family
The right planning provides clarity, avoids unnecessary disputes, and ensures the business you’ve worked hard to build continues to thrive. To ensure your business interests are properly considered in your estate plan, speak with experienced wills solicitors who can guide you through the process with care, insight, and expertise.
