It may be difficult to think about arrangements for if the worst should happen, but the importance of writing a will cannot be understated.

Your will determines what should happen to your estate (your money, property, and possessions) after you die. But one aspect of will writing that some people forget is deciding what happens to your business.

Having an up-to-date will can ensure that your wishes are respected, your business is taken care of, and that your loved ones are not exposed to additional distress. Here’s what you need to know.

What happens if you do not leave a will?

If you have not made a will, you will die ‘intestate,’ which means that your estate will be shared in a standard way defined by the law. Only married or civil partners and certain close relatives can inherit under the rules of intestacy.

If you have no surviving spouse or civil partner, your children or other close relatives will inherit your estate. In cases where there are no surviving relatives, the estate (including your business) will pass to the Crown.

Not making a will may be more costly than making one, as disputes may arise when you die intestate, and identifying your potential beneficiaries can be a drawn-out procedure. This can be highly costly and distressing for the ones you leave behind.

What’s more, without a carefully considered will in place, your business may pass to someone who does not have the passion or personal attributes to carry your business legacy forward.

Alternatively, your business may pass to multiple people who become engaged in disputes over how the business is run, leading to either the mismanagement or rapid degrading of your business.

Why should you include your business in your will?

Including your business in your will means you gain more control over how it will be shared after your death. This can give you confidence that your interests are in capable hands, as you can identify people you trust to secure your business’s future. These named beneficiaries do not need to be family members but could be trusted employees with an intimate knowledge of your business.

Business structures

If you’re a sole trader, your business will end when you die, but your business assets will form part of your estate. The executors may need to sell some of your business assets to pay off any liabilities before distributing the remaining assets per your will.

To enable your chosen beneficiaries to have the opportunity to maintain your business after your death, it is necessary to plan ahead.

If you’re in a business partnership or own an interest in a company, you should familiarise yourself with the terms of your respective agreements before making a will to help prevent conflict with the terms. For example, some agreements may pass on shares or business interests to family members.

Get help

Making a will is an integral part of the succession planning process, which gives you the best chance of ensuring that the hard-earned fruits of your labour are passed on as you wish.

We can advise you on the tax implications of different estate planning strategies, including trust structures you can capitalise on.

Let us help you plan your succession finances.