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Most people have in place a will and other estate planning processes to protect their assets when they pass away. However, it’s equally as important for business owners to have plans in place should they or their business partners die.
This may not be something you want to think about as it can be a delicate matter; but imagine the issues you may face should this happen without a plan in place.
Ideally, business owners should enter into a business partnership and/or and agreement which will enable the remaining owners to continue to run the business with the minimum of disruption. The agreement should set out the rules for the succession of the business to be run as far as possible in the way that you would wish and provide detail to each business partner or owner what their rights and responsibilities are in a given situation.
Business Succession Agreements
Ideally, a business succession agreement should include:
- Provisions for other partners to buy out the business
- Clear instructions on the delegation of decision making and management responsibilities
- Instructions on the best interests of the business including the owner’s dependents
The agreement should also help reduce the taxes payable upon death and help speed the administrative probate process in dealing with a deceased business owner’s estate.
The Importance of a Will
Just like for your private assets, it’s important to have a will which covers your business assets too.
Without a will, your plans and wishes for your business will not be respected. It’s also a tax nightmare if you die intestate which could result in the loss of crucial business property reliefs for example. For example, if your family is to inherit your business, they may end up having to sell it to pay for the inheritance tax accrued. What’s more, they will have no legal obligation to sell your share of the business to other co-owners who are experienced at running it.
Trusts and LPA’s
The estate planning for the ongoing running of your business could include setting up a trust (giving authority for trustees to act on your behalf). With a trust in place, you don’t only benefit from tax advantages but also you will relieve any responsibility which may fall upon family members.
It’s also a good idea to put in place a Business Lasting Power of Attorney (LPA) in case you lose mental capacity or suffer from an illness which prevents you from running the business. An LPA means your wishes are known and so will avoid disputes and disagreements.
Swansea Legal Solutions
At Swansea Legal Solutions we offer a full range of estate planning for business owners including writing wills, putting in place LPA’s and trusts as well as a selection of business agreements to suit companies of all sizes.
To find out more click here or call us on 01792 420844.
