What happens to your business when you die?
If you run a business, have you ever wondered what would happen to that business if you suddenly died?
This area of the law can be complex and if you don’t seek the legal advice that you require, things could potentially go very wrong once you pass away. It’s estimated that there are over 5 million small-to-medium sized businesses in the UK. It is extremely important that business owners have a Business Succession Plan in place so their business is protected and instructions can be left regarding what happens if they die or are no longer capable of managing their business.
A standard will won’t normally be sufficient for protecting a business. A Business Will is likely to prove much more valuable when it comes to instructing people how to deal with business assets. In a Business Will, the owner can appoint executors to deal with their interests. These executors will have in-depth expertise that will help them deal with your interests properly. Business executors are similar to standard executors. The difference is they are tasked solely with looking after business assets.
If you are in a business partnership, it’s vital that business succession planning is arranged. If a Partnership Agreement is not drawn up prior to your death, the partnership could be dissolved. However, when a PA is agreed, the business may be able to continue trading, and the remaining partner will have the opportunity to buy your shares from your estate’s personal representatives. A Shareholder Agreement may also be beneficial as it can determine what will happen to your shares if you die.
Insufficient insurance cover has also proved to be a big issue for small businesses. Without the right legal cover, it may be impossible for your family or colleagues to buy your share of the company if you die. It’s thought that approximately one million UK businesses are lacking share protection insurance. Those running small businesses are being urged to think about what would happen if specific individuals passed away. Without the right level of insurance in place, businesses may find themselves unable to trade and pay wages and suppliers. They may also be unable repay loans and the families of individuals running or owning shares in the business can be adversely affected. Though most small business owners say they would like to pass their shares to their family or other specific individuals after they have passed away, surveys have suggested that almost half are yet to put something in place to ensure this is the outcome.
How we can help
At Miller Reeves, we have years of experience when it comes to helping people put their affairs in order so their loved ones are protected once they pass away. We are experts when it comes to estate planning and can suggest solutions that are easier to implement than you might expect. We can help you and your family get the peace of mind you are seeking. To find out more about protecting your business in the event of your death, contact us on 0333 300 1882 or via firstname.lastname@example.org.