Why Should Business Planning Include Making A Will?
Business planning is important for everyone in business to ensure there are plans in place to overcome different scenarios and challenges – and this includes making plans for what happens when you die.
By having a professionally drafted Will that includes plans for your business, you will make it far easier for loved ones and business colleagues after your death as they will know whether to continue with business as usual or to wind down the company, as well as just how best to carry out your desired wishes.
The Impact of your Death on your Business
If you die unexpectedly, what will happen to your business?
Every business is unique and faces different risks and challenges. Some businesses could carry on with only a few hiccups if you died, such as a property letting business, especially if you had good letting agents able to carry on with work on your behalf. However, more creative companies such as web design or crafts-based businesses would struggle after your death as there would be outstanding orders and stock etc to handle. A lot depends on how personal your connection with clients or customers is.
Business Planning & Making a Will
The ultimate question is whether the business could continue without you? Are you the business or would your death mean the company is ripe for purchase?
Knowing the answers to this key issue will help you to achieve effective business planning within your Will.
Other important aspects to consider, include:
Business Structure
Death will normally terminate a partnership but not a Limited company; in the latter case you may wish to provide who is to get your Shares.
Tax Planning
Consider the implications of tax on your company as by making provisions for this in your Will, you may reduce the amount of tax paid after your death.
Business Agreements
Depending on the nature of your business, you might have a business agreement already in place.
If you work alongside other directors or partners, you are likely to have an existing shareholder or partnership agreement that details what happens if you, or your fellow directors or partners were to die. The information includes whether the survivors in the business can continue as normal and whether your fellow directors or partners have an option to buy your share and how the value of your share is calculated.
Any business agreement will take priority over your Will, but your Will acts as confirmation of the wishes expressed in the agreement. It is important to have an up-to-date agreement in place so if you don’t have one or it’s out of date, speak to your solicitor to draft one.
For sole traders or those working in a family business, a business agreement might not be appropriate. Instead, it’s important for these business people to provide detailed information in their Will and to make sure the executors have the power to continue running the business after your death and of course at the same time you will need to consider the question of succession.
Executors
You need the right executors for your business to minimise the stress for your family who won’t necessarily have the required business knowledge to help.
Your Will For Your Business
As a guide, make sure you set out your requirements for your business after your death within your Will, including:
• What happens to the business
• Who will run the business
• What happens to your share of the business
• The future for your employees
• Whether the business continues to use the same professionals (accountants, lawyers etc)
• Letter of Wishes
You can include a letter of wishes for your executors, outlining exactly what you want them to do and detailing what powers they have to run the business. Information such as your preferred suppliers and what your bonus structure is, can be included within the letter – although it’s not legally binding, it’s useful to ensure the smooth running of your business after your death. Seek legal advice to check what needs to be included within your Will itself, for peace of mind.
Helping You With Your Business Planning
Our specialist Wills and Probate solicitors have the required experience and legal knowledge to guide you through the process of business planning and making a Will to ensure you include the right provisions for your company for complete legal protection and clarity.
By including business plans within your Will you ensure continuity for your company or the empowerment of your executors to sell the business efficiently after your death. This provides you with peace of mind that your business will be taken care of when you die and that there will be minimum stress on your family and colleagues as a result of your Will.
