Protecting your business: Why business wills are important
Posted by siteadmin on Thursday 4th of February 2021.
We all know how important it is to have a will in place to ensure assets are passed on to loved ones in a way that aligns with your wishes. But, if you’re a business owner, have you included your business?
When writing a will, there’s often a focus on your personal life and it can mean that your business is forgotten about. However, having a business will in place is an important part of succession planning for business owners, as well as preparing for the unexpected. It’s a step that can ensure the smooth transition of ownership if an owner passes away.
Why is a business will important?
Who inherits your shares or business interest is important for long-term success. Without a will in place, your business or shareholding could pass to someone that:
- Has no interest in running the business
- Does not have the necessary skills or knowledge
- Could cause conflict within the business.
When distributing assets in your will, you’ll often think about who you want to benefit. When it comes to business assets, you also need to think about what will benefit the firm.
Not having a business will in place could lead to your business and legacy losing value. Many business owners have spent years building up a firm and invested not only money, but time in it too. It’s natural to want your firm to continue after you pass away. Neglecting to think about how you’d like to pass it on and what’s right for your vision could cause harm.
You may also have strong feelings about who you want to inherit your business. For example, you may want to pass it on to family or even a trusted employee.
Whatever the size of your business, a business will is essential. It should be considered alongside your business plan and reviewed at regular intervals to ensure it continues to reflect what you want.
Seeking advice to support your business goals
Putting a will in place means considering many different assets and you want to have complete confidence in the steps you’ve taken. For this reason, seeking professional advice is advisable. It provides you with an opportunity to discuss all your options and take steps to ensure your succession plan reflects what you want.
- Legal Advice
Putting any will in place can be complex, and even more so when there are business assets to consider. While it is possible to write a will yourself, for many, contacting a solicitor makes sense. A legal professional can help you understand your position and how to create a will that reflects your wishes.
Mistakes in wills can mean that assets aren’t distributed as you’d like and cause conflicts. By working with a solicitor, you can have peace of mind. They may also be able to suggest where alternatives to your initial plans may make more sense. Working with a professional means you can focus on running your business, knowing that one of your most valuable assets is covered in your will.
- Financial Advice
Working with a financial planner also makes sense as you prepare a business will.
We can help you understand how it fits into other plans you may have. This includes what other assets you’ll have to pass on and how you want them distributed among loved ones, as well as understanding the value of assets, including your business.
Financial planning can also help ensure you’re passing on assets in a way that is tax-efficient. If you’re concerned about Inheritance Tax, for example, there are often steps you can take to reduce the bill, including when you’re passing on business assets. One of these steps that may be suitable for business owners is Business Relief, this can provide either 50% or 100% relief on some of an estate’s business assets, either while you’re still alive or as part of a will. Business relief can be claimed on property or buildings, unlisted shares, and machinery.
If you’d like to discuss a business will, and other steps that can provide stability for your firm, please get in touch. We’re here to help you make the most of your assets and have confidence in the steps you take.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate and tax planning and will writing.
Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.