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Home > News > Your Family Business and Your Will

Your Family Business and Your Will

15 November 2017 | Heledd Wyn

After a person has died, their estate will be passed on to those named in their will: their assets and possessions, anything that they own. In situations in which there is no will, then that estate will instead be passed down to those that fall under the rules of intestacy.

When this is a family business, whether a partnership, sole trader, or majority shareholder, there are significant implications – not only for those who may inherit, but for other directors, shareholders, and even employees.

Firstly, you must consider whether the business itself can continue to function without the recently deceased. If they alone are able to keep it running, then the value of the business itself may significantly decrease by the time that it passes over to the beneficiary or beneficiaries. The inheritance may simply not be worth the same due to operational issues.

Secondly, without a will there are only certain people – limited by the law – who can carry out the administration of the estate, and those individuals may not have a keen understanding of the value or administration of the business. Similarly, the beneficiaries themselves may not have the capacity – whether due to age, mental awareness, or sickness – to make competent decisions about the business. This is why making a will is so vital, so you can specify exactly who you wish to deal with your estate after you have died.

Thirdly, this is the perfect time to consider inheritance tax liability, to protect both your business and those who will own and run it after you. Although business property relief can easily be overlooked, it is essential that the time is taken to fully explore your options. This can make a huge difference on second death when it comes to inheritance tax.

These are just some of the issues when undertaking an estate planning exercise when a business needs to be considered. Other factors include whether you want to have a power of attorney made, and whether you want your business to be managed by a trust for a minor.

Our experts are happy to explore your options with you, and guide you through this process. Just get in touch with them here.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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