What happens to your business if you were to die?
Have you ever given thought to what would happen to your business if something should happen to you?
No one wants to think about their own mortality least of all me, but I do accept that I am faced with risks on a daily basis. This could be anything from driving to work, tripping over literally anything or dare I say it, my wife’s cooking.
There is often a lot of confusion around what you need to do to ensure the continuity of your business but when it comes to it, it’s really quite simple.
Firstly it depends on how you own/hold/run the business. Here’s a brief summary of practical considerations:
Sole Practitioner – A gift of the business can be made in the testators Will stating the beneficiary they wish to inherit. It might we prudent to appoint the beneficiary as the executor relating specifically to the business assets.
Partnership – It is wise to check any partnership agreement before making a gift in a Will. It may be that the agreement confirms that a surviving partner can purchase the deceased’s share but there could be tax implications regarding business property relief. This should be checked with an estate planning professional.
Incorporated – In this instance the testator can leave their shares to anyone they wish in their Will subject to any conditions in the articles of associations.
If you would like your business to continue then obviously planning has to be done to ensure that the person/people that you would like to inherit your business can do so. You should certainly look to have continuity plans in place if you employ staff.
If you don’t want the business to continue then the necessary steps have to be taken. Employees need to be taken care of, customers should be notified, outstanding bills should be settled, and any tax should be paid. For more information on closing your business you should consider this information from the GOV.UK website.
Who would you like to inherit the business? This should be carefully considered before writing your Will. Is the person you want to inherit the business be able to run the business? If not, is there someone that can help them? Will they run the business in accordance with your business ideals? What is their financial position like? Are they likely to damage the reputation of the business?
Would you want the business to be sold and the money to go to anyone?