Most business owners find their time is taken up by the day to day running of their business and their plans to expand it. However, it is essential to consider what would happen to the business if the owner died, whether the business in question is a sole trader, partnership or limited company.
Firstly, all business owners should make a valid will and give particular thought to their choice of Executor. Executors are responsible for the administration of the estate which would include managing the business assets in accordance with the will. This may involve winding up the business, selling it or transferring it to the beneficiaries. The business owner should choose Executors with the necessary skills and experience to do this. It may be sensible to include a professional Executor (such as an accountant or solicitor) to act alongside family members.
Business assets may qualify for an inheritance tax exemption called Business Property Relief (BPR). BPR may be available on assets such as business premises, unlisted shares and machinery. Conditions apply as to the length of ownership and certain types of business do not qualify for BPR so business owners should take legal advice on inheritance tax planning as soon as possible.
If a business is owned jointly, the owners may wish to enter into an agreement that the survivor will purchase the deceased’s share. Life insurance policies can be taken out by each owner to fund the purchase should this situation arise.
At Bretherton Law, we advise business owners on preparing wills and inheritance tax planning. Arrange an appointment with Anne Stockley on 01727 869293 or book your appointment online to ensure that your will is put in place. Please note we that we offer a free 20 minute consultation on Wednesday afternoons but please book in advance.