Writing a Last Will and Testament as an SME Business Owner
With endless tasks and things to plan, schedule and remember as an SME business owner, estate planning can fall to the bottom of the pile. But with life being as tumultuous as business, considering your last will and testament is absolutely essential as an SME owner.
Why is a Will Vital as a Business Owner?
When you own a business, your personal and professional life are often closely intertwined. A will is of course about protecting personal assets, but it’s also there as a protection for you to safeguard what you’ve worked hard to build.
Without a valid will in place, your estate (which could include business assets) will be distributed according to the rules of intestacy. This could mean:
- The wrong people inherit your business shares or control.
- Confusion or disputes among your loved ones or business partners.
- Business operations coming to a standstill due to legal complications.
Leaving a business in a will that’s well-drafted and clear ensures your wishes are communicated without confusion, safeguarding both your family and your business interests.
How Does Your Business’s Structure Determine How Your Estate is Passed Over?
The way your business is structured plays a key role in how it’s treated in your estate. Whether you’re a sole trader, in a partnership, or a director of a limited company this can vastly impact how your estate is treated after you pass away.
Sole Traders
If you operate as a sole trader, you and your business are legally the same entity. This means your business assets (equipment, intellectual property, outstanding invoices, contracts etc) form part of your estate and will be dealt with according to your will. However, if you don’t have clear instructions on how you want these assets dealt with, it can be difficult for your loved ones to manage or continue the business.
Partnerships and Limited Companies
If you’re in a business partnership or you own your own business, it’s vital to check your partnership or shareholders agreement. Many agreements include clauses about what happens when a partner or owner dies, such as whether the remaining partners or the company can buy out the deceased’s share. If there’s no agreement – or no will – it could result in a messy legal situation.
A will can work in harmony with your partnership or shareholders agreement to ensure a smooth transition, and an expert estate planning lawyer can support you in making your will work with your partnership contract.
Changing a Will
Like everything in life, business dynamics change. You may retire and sell off your assets, restructure or perhaps in a few years your business will be 10x bigger than it is today.
If you’re leaving a business in your will it’s essential to review and update your will regularly. Key triggers for updating your will might include:
- A change in business ownership or structure
- Buying or selling assets
- Marriage, divorce, or the birth of a child
- Moving premises or expanding into new areas
If your circumstances change and your will doesn’t reflect your wishes, you risk leaving behind confusion – or worse, disputes. It’s good practice to review your will every few years or when a major life or business event occurs.
What Do You Need To Prepare For Will Writing?
Before you sit down with a solicitor, there are a few things to get clear on:
- Business Valuation – Understand the value of your business and its assets.
- Succession Planning – Who should take over your business, if anyone? Do they have the skills and interest to do so?
- Key Contacts – Who should your executors or family contact regarding the business?
- Partnership or Shareholder Agreements – These may need to be aligned with your will.
- Liabilities – Understand what debts or financial obligations need to be factored in.
Coming prepared makes the process smoother for you and your lawyer, while ensuring nothing important is missed.
Estate Planning for Business Owners with Hepburn Delaney
As an SME ourselves, we understand the pressures of running a business. We work with SME owners who want the peace of mind that comes with knowing their affairs and wealth management are in order.
We offer a friendly, clear and personal approach so that we can offer you straightforward solutions that work for you and your family.
We Can Help You:
- Create or update a will that reflects your personal and business interests.
- Navigate complicated business ownership structures.
- Support you with tax planning
- Ensure your family and employees aren’t left in limbo if you’re leaving your business in a will
With offices in Hemel Hempstead and Harpenden, we’re here to support Hertfordshire business owners with expert, local advice that protects their estate, and any other family law matters.
Contact our inheritance team today for specialist advice.
