It is important for everyone to put in place a Will but this becomes vital if you are the owner of a business. Should you die without making a Will then your estate passes under the intestacy provisions. This can place an extra burden on family members at a time of grief but for the family of a business owner and their employees it can be disastrous. The business can be left in limbo for months which can cause difficulties in paying staff and suppliers, fulfilling orders etc which over time will ultimately affect the value of the business that you have worked hard to build. With a Will your business continuity can be ensured.
When making a Will business owners need to consider how their business will function. You can, if you wish, appoint separate executors to deal with your business and business assets from those who will deal with your personal affairs. Whilst the law gives executors and trustees general powers, the statutory powers for running a business are designed just to keep the business “ticking over” until it is either sold or transferred. In your Will you can broaden these powers to ensure the smooth continuation of the business.
It is not just the day to day running of a business that is important to consider. Relief from inheritance tax is available to trading businesses and business assets provided you meet the necessary criteria. This gives business owners scope for inheritance tax planning both when considering lifetime gifts as well as on death. If you wish to make a gift of your business (or part of it) to a family member(s) then you should take legal advice to ensure that you benefit, in so far as possible, from this very valuable relief. In addition, a well drafted Will can ensure that your estate, to include your business, passes as tax efficiently as possible to your chosen beneficiaries.
Not only death can cause disruption to a business. If the business owner is unavoidably detained abroad (think of the ash cloud last year), becomes physically (temporarily or permanently) incapable of managing the business or worse, becomes mentally incapable of managing their affairs, then this too can cause difficulties. One way of ensuring that your business is not troubled in such circumstances is to put in place a Power of Attorney. A General Power of Attorney is one type in which you select the person or persons who can administer your affairs in your absence, this can be limited to just your business affairs or extend to your personal affairs as well. The limitations of this power is that it ceases to operate if you lose mental capacity. A Lasting Power of Attorney is an alternative.
Remember, the goodwill of a business can be seriously affected by the death, absence or incapacity of the owner. Make sure you take steps to ensure that your business is not the one to suffer.
Florence and Andrew are both members of the AMD Solicitors Wills Probate and Trust team. Florence is a full member of the Society of Trust and Estate Practitioners (STEP) (the leading professional body for practitioners in the fields of trusts and estates) having completed the necessary STEP qualifications. Telephone 0117 9898518 or email firstname.lastname@example.org or email@example.com.
Copyright AMD Solicitors 2011