Do you need a business will?
Do you need a business will? If you’re not sure what a business will is or why you might need one, then read on. While many of us create a personal will, we often don’t consider what might happen to our business when we die.
What is a business will?
A business will is a formal agreement that puts in place what will happen to your share of the business and liabilities should you die or become critically ill.
Do you need one?
- Have you thought about what would happen if you, a co-owner, business partner or fellow Director died?
- Do you have an exit strategy in place for the death of the business owner?
- Are there finances available to purchase the deceased’s shares in the business?
- Is there an agreement in place currently to allow the other owners, director or partners in the business to buy out the shares of the deceased?
- If you do not already have something in place to cover these eventualities, then you may wish to consider setting up a business will.
What happens if you do not have a business will?
Business intestacy is what happens if the business owner dies without there being a business will in place. What it essentially means is that decisions will be made about your business in line with current regulations and it may not be what you would have wanted to happen.
Under the Partnership Act 1890 (PA), a business partnership is dissolved on death if there’s no agreement to say otherwise. Meaning there is no continuing right to share in the profits as a partner if one party dies and the business cannot be sold on the open market.
If your family inherit the business under your personal will without there being a business will also in place they would not have any rights:
to wind up the business to get an amount representing the value of your interest
force the surviving members to buy your interest in the business
sell your interest in the business to any willing buyer on the open market
This means that they may not be able to access the financial support they need from your business as you may have hoped.
Getting appropriate protection
It is crucial to have the appropriate business protection in place that meets the needs of you and your organisation. That’s why you may wish to consider seeking professional advice to ensure what you put in place is suitable.
Our Life Centred Business Planners will work together with you to assess what business protection cover you require and find the best solution for your company. Providing support, expertise and ensuring you understand the terms of the protection you choose to put in place. Why not contact us today for a complimentary 1-hour consultation with one of our planners to see how we can help.
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MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, taxation, debt management, savings and investments, lifestyle planning and much more.
Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.