Why it is important for all business owners to make a will

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When thinking about making a Will, we tend to consider our properties, personal effects, and savings, however it is surprising how many of us do not consider what would happen with our business in the event of our death.

Seeking professional advice and creating a well-constructed Will is crucial to make sure that your business is protected and passes to the appropriate person, in accordance with any existing agreement you have in place.

Without a Will, it is possible that your share in your business, be it the whole business or a partial shareholding, could pass to someone who does not have the sufficient experience to be able to run the company, may not be suitable due to ill health or lack of capacity or maybe has no interest in taking on this responsibility.

There are factors to consider when making your Will, such as if your business is in a partnership or if you are a sole trader.

Many sole traders will wind up their business before they die, however if you are still running your sole trading business at the date of death, your business will form part of your Estate and be wound up either by the executors of your Will, or by the administrators of your Estate under the rules of intestacy, should you not have a Will in place.

When dealing with a partnership, the options available to your executors or administrators depend on the terms of your existing partnership agreement.

It is possible that your executors will have the option to request the partnership to buy out the Estate’s share or they may be free to sell or transfer it to other parties.

As with any business interest, it is possible that the executors may need to sell any interest in a business to ensure the settlement of debts or taxes which are the responsibility of the Estate. When considering making a Will in relation to your business, it is important to consider the age and personal circumstances of each of the beneficiaries.

Quite often a Partnership Agreement will deal with what happens to your interest when you die and therefore, if this is the case, it may be advisable to review this in advance of making a Will.

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