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Business Protection

Protecting your Business

 

We understand that setting up, running and becoming a successful business takes time, expertise and a lot of years of hard work.   We believe business's should be protected if a key worker should die. This can be done by adding well drafted business continuation clauses to your Will.  

 

Without a Will, business interest or shareholdings could pass to:

 

  • People who have no interest in keeping the business going

  • Someone who has no experience of the business to keep it running 

  • Several people who can’t agree how the business should be run.

 

If any of the above should occur the business could lose value and become unprofitable. It might also be sold off quickly well below its market value. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Passing interests to a family member

 

This will depend on the business’ partnership agreement or articles of association. If there is a shareholders’ agreement, this may also have an impact. It’s important to check these documents before making a Will. Also do family members want to be in the business. One option is to set up a trust to hold shares so family members can benefit without being directly involved. 

 

Inheritance Tax

 

Passing on a business through a Will can mean that your estate has to pay a substantial amount of Inheritance Tax. In some cases, executors may even have to sell business assets, shares or interests in order to pay Inheritance Tax. In other cases, your business interests might be eligible for Inheritance Tax relief. This means it’s important to plan how your estate will manage Inheritance Tax in advance.

Business Meeting

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Sole Trader

 

A sole traders business will end on death, but business assets pass to the executors of the Will as part of the estate. With no Will, the net estate will pass according to the intestacy rules making it difficult for someone to restart or continue the business.  This can be avoided with a well drafted business continuation clause added to a Will.

 

Business Partnership

 

A partner of a business who has no Will passes business assets to the administrators of their estate. Exactly how the executors or administrators handle this interest will depend on the specifics of any partnership agreement. 

 

For example:

  • Other partners may have the option to buy the interest before the executors sell or transfer it.

  • Executors might have the right to require the other partners to buy the interest.

  • The executors may also need to sell the interest to pay any debts or taxes that your estate has. 

 

The executors will then pass on the interest – or any sales proceeds – in line with the Will. If there is no Will,  the administrators will pass them on according to the intestacy rules

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