Wills and Probate Solicitor, Andrew Jack, considers the importance of making a Will if you are the owner of a small business
Although it is important for everyone to make a will, it is particularly vital if you are the owner of a small business. If someone dies without making a will (“intestate”) the law determines both who receives their assets and who can deal with the estate. For the family of a business owner and for their employees it can be disastrous.
The administrators of an intestate estate only receive their authority once a grant has been issued by the court. This can effectively leave the business in limbo for months meaning amongst other things, staff will not be paid and neither will suppliers. Orders can not be fulfilled and even mundane things such as insurance cannot be arranged until the grant has been issued.
Reading this far, a business owner who has made a will may be thinking that everything is in order and they do not need to worry about their affairs. Not necessarily so because the laws that give executors and trustees their powers are very general and are not designed with business owners in mind. There are statutory powers for dealing with running a business after death but these are designed to allow the business to keep “ticking over” until it is sold. The only people authorised to carry on in this way are the executors stated in your will. Generally executors are friends or family members. Are they really best placed to keep your business running?
A business owner making a will should consider additional provisions for example to appoint general executors to deal with personal items and bank accounts but specific executors to deal with their business. This could, for example, be a fellow director. An important power not provided for in the general law is to allow the executors to appoint a manager to deal with a business on their behalf.
Not only does the day to day running of a business need to be considered. There are various reliefs that may be available on businesses and business property upon death. A well drafted will can maximise these reliefs and ensure that your estate passes as tax efficiently as possible.
Last but not least a business owner should remember that provisions need to be in place not only in the event of death but in the event of mental and physical incapacity. Most people assume that mental incapacity only strikes the elderly but accidents can happen to anyone.
Remember people use your business because of your expertise. Shouldn’t you use our expertise to ensure that your business continues?
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