Why your business needs to be in your will
Making a will can be complicated enough when you’ve only got personal property to think about. When you’re a business owner it can be even more of a minefield. Your wishes are still important but there are other rules and regulations to consider. You also need to think about what will happen to your business when you’re gone. Will it be wound up or carry on without you? If you’re a business owner preparing to make a will or create a lasting power of attorney, here are a few things to think about.
What will happen to your business?
If you’re part of a partnership or a limited company with other directors, it’s likely that your business will keep going without you. Your business and continuity planning should take this into account and may already be included in your company documents. If you’re a sole trader your business doesn’t necessarily have to close as you may be able to leave it to a trusted associate or employee.
If your executors need to wind everything up, they may also have to run the business for a while. There could be outstanding work to do and there will almost certainly be bills to pay. You’ll need to choose executors with the right skills and give them the powers they need. Whatever you decide, it’s always a good idea to have a backup plan.
It’s important to think about what will happen if you need to take a leave of absence due to illness. If you don’t have capacity to manage your own affairs, who will step up to look after things in your absence? You may already have a finance or health and welfare LPA, but you can also create a business version. The provisions you make must reflect your company documents and any requirements set by relevant professional or regulatory bodies. Your attorney may need to be properly qualified to meet the right standard.
Even if you’re a sole trader in an unregulated field, does your attorney have the right knowledge to run your business for you?
What do your company documents say?
Your business structure will have a bearing on the provisions in your will. If you have a limited company, you have responsibilities under the Companies Act and there may be other regulatory issues to consider. Your company documents, shareholder and partnership agreements will overrule your will or power of attorney if there’s a clash, so it’s crucial that the person preparing your documents has that information. There may already be continuity planning in place that your will needs to reflect.
Making sure that everything’s consistent makes the whole process easier to deal with after you’re gone.
Looking after your clients
Ultimately, your business has loyal clients and customers who come back to you time after time. You could also have ongoing relationships with people that rely on you. Whatever you decide to do with your business when you die or are unable to continue, it’s important to consider those people. Some may simply be able to go elsewhere, but your client relationships are important. Don’t leave them high and dry.
Even if your business is going to close when you’re gone, the outstanding work will need to be completed and the bills must be paid. It’s always a good idea to have a plan.
Do you need to protect your interests as a business owner? Get in touch using the form below or call us on 0116 380 0752.