Statistics tell us 30 million people in the UK are currently without a Will, with 67% of those aged 35-54.
Many of these people will be business owners or have an interest in a business. If you fall into this category it is important to ensure that you have a Will in place to complement your business succession planning.
If your business has a Shareholder’s Agreement in place, there is a need to make sure your Will complements this agreement and no conflicts occur. Your Will should outline that your part of the business passes to who you want it to – for example if your son works in the business and you want your share to pass to him alone, then you will need a Will to ensure this happens.
Many businesses will qualify for Business Property Relief – the value of the business in your estate can be reduced by up to 100% for inheritance tax purposes, so savings are available, but it is important that these are properly considered in your Will and in the context of the rest of your assets. It may be more tax efficient for business interests to pass into a trust rather than be given directly to a spouse. If the business is eventually sold, the proceeds of sale will not qualify for business property relief and will be taxed in your spouse’s estate. In a properly constructed trust, your spouse can still benefit, but the assets in the trust will not form part of their estate.
Making a Will is only one part of succession planning but needs serious consideration. If your Will does not properly fit with other plans, complications can arise; consider ownership of the business, who owns the shares at present? Does somebody’s spouse hold the shares for tax purposes but play no active role within the business? If you leave your shares to your intended beneficiary or beneficiaries, how does that affect control and voting rights within the company?
At Else Solicitors LLP, we can assist you with all aspects of business success planning, all under one roof.
We are also pleased to announce that Else Solicitors LLP will be taking part in National Make a Will month this November. During the campaign, we will waive our fee for drawing up a basic Will and invite clients to donate to charity instead.