The internet is full of advice for business owners; from how to structure their day for maximum efficiency, to how to be an inspiring leader. One aspect of owning a business that is often overlooked is the importance of having an up-to-date will in place.
Your business assets are part of your personal estate. And so will be subject to inheritance law if you pass away without a will. This could lead to a legal battle that will mean your business dies with you.
Five Reasons You Should Write a Will
Many people assume that when you die, your assets will be logically divided up and that will be the end of it. Unfortunately, it is never this simple. In 2004, Swedish author Stieg Larsson died without having his will witnessed. And his partner of 32 years received nothing from his estate. His family granted her ownership of the home she had lived in with Larsson. But she did not receive anything from the 80 million copies of his book sold and subsequent film adaptations. If you want to protect your family, you need to make sure your assets are correctly distributed in your will.
If you are in charge of an owner-dependent business, it is not unheard of for a business to fail following the death of the owner. Due to poor planning, a successor is not named. And the remaining parties with an interest in your business are left fighting for the scraps. If your will only acts to name a successor, it will help your business to continue should you pass away.
If you employ one or more of your children in your business and pass away without a will; there is a chance the business will be split between all of your children; regardless of whether they currently work in the business. This can lead to unnecessary conflict between your children. As the one who works in the business may have to buy out the other siblings in order to take control.
Writing a will can help you and your loved ones to better navigate inheritance tax. Business Property Relief provides relief from inheritance tax, but planning is required. If your partner sells the company after your death, the money from the sale will become part of their estate, and therefore subject to inheritance tax when they pass away. This means there will be less money for your children to inherit. On the other hand, if your will states that the company be passed to a trust and your spouse becomes a shareholder; they will continue to benefit from the company without losing value to inheritance tax.
Getting older or developing an illness isn’t the only reason you should start thinking about writing a will. And you shouldn’t feel like you’re bound to the first will you write, as it may need updating throughout your life. If you get married, enter a civil partnership or have children, you should think about updating your will.
It isn’t a pleasant thing to think about, but if you want to make sure your family and business are taken care of should the worst happen, you need to plan ahead. Will disputes are a costly and often drawn-out process that can easily be avoided. Losing a loved one is hard enough without the added pressure of hiring a dispute resolution solicitor to solve a problem with a will. It can also create unnecessary conflict between siblings and wider family members at a time when families should be sticking together for support.