As a business owner, you must be aware that’s it is inevitable you will need to leave your business one way or another. Whether it’s because you’ve retired, passed away, or are handing it down to an heir, there are special plans you should have in place for every eventuality. If you don’t have solid plans in place then you risk your business being sold, broken up or your shares being sold off.
When To Draft A Will
Drafting a Will will ensure the future of your business and assets, while also giving you peace of mind knowing that everything it taken care of. Though your Will should be compiled early on, it also needs to be late enough to make sure that all assets are covered. For many, it’s a few years before they reach retirement age. As a business owner, your Will is so much more than simply who will inherit the estate, but it delves deeper into the real value of the business and the intended beneficiaries.
Many business owners wish to pass it down to an heir, while others want to sell the business and divide the value between members of their family. Any Will planning will have to take into account the goals of the business owner, honouring their wishes.
Establishing Heirs and Inheritors
Business owners may already have someone in mind to pass the business onto when they pass away, but there’s no guarantee that the beneficiary will actually want the business. Taking on a business is an extremely big responsibility, and if it’s a family business there’s always a tendency to assume the next generation will take it on. However, they may not always be willing. So, there are some important factors to take into consideration before passing the business onto an heir, such as:
- Who is willing to take on the business?
- How many people can it be passed onto given the company’s structure?
- What are the tax implications going to be?
If you’re unsure about passing your business onto an heir, you can work with contentious probate solicitors who will be able to advise you. It’s vital that you have these conversations before blindly drafting your Will, otherwise your business goals may not be realised.
For Tax Planning
If you’re planning to retire at the same time as writing your Will, then you’ll need to follow a few tax guidelines. Firstly, you need be cautious that you don’t breach the pensions lifetime allowance limit, or you may be liable to pay more tax. Moreover, you should focus on minimising inheritance tax on your estate by gifting assets in your lifetime. Lastly, consider the transfer of interest as this could affect the success of the business.
To Set Goals
Setting long-term goals for the business should be a priority when drafting a Will, as business owners can make a note of their wishes for the future. For example, you will want to ensure that the goodwill and values of your company are maintained even after you pass. If you neglect to highlight this in your Will, then your name could be damaged by the next owner.
When To Change A Will
It’s imperative to keep your Will up-to-date to reflect your most current circumstances. This means that whenever there is a significant change in your life, be it a marriage, divorce, birth or adoption, you should make changes on your Will. The law requires you to make these adjustments because if you don’t you may be treated as having no Will at all.
Jamie is a freelance business and legal writer. He used his knowledge from education as well as working alongside will writing solicitors to produce the information in this particular article. His aim is to expand his knowledge through research he conducts and gain further recognition of his skills as a legal writer in various topics.
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