If you own all or part of a business, you should have a will. If you die and don't have a will, your shares could be sold, the business could be broken up or it could fall apart because of poor management.
If you die and don't have a will, all your property (both business and non-business assets) will be distributed under the laws of intestacy - and you and your loved ones will have no say as to where your assets end up.
Generally, anyone over 18 of sound mind can make a will. It should include instructions in relation to your money (including pensions, insurance policies and shareholdings), property and personal possessions, together with details of your executor(s) and beneficiaries.
If you do not make a valid will, anything you own will be distributed in accordance with the intestacy rules. If no beneficiary can be found, your assets will go to the Treasury. Is that where you want your business to end up?
There are several ways to make a will, including writing one yourself on a plain piece of paper, but the most recommended way is to seek professional help. The professionals can advise on inheritance tax and trusts, and ensure the will is valid. They may also store your original will at no additional cost.
If you run a business, it is particularly advisable to seek professional help in writing a will. For example, if you are a majority shareholder but die unexpectedly without a will, your shares, and therefore, majority ownership of the business would be subject to the intestacy rules.
If you are not on speaking terms with the inheritors or they do not understand the affairs of the business, a number of things could wrong. The shares could be sold, the business could be broken up or it could fall apart without the correct day-to-day running in place. If shares are split between your spouse and children, this could make things very difficult, because the children might not be old enough to make business decisions.
A will, therefore, can set out to whom you want your business (or shares) to go, which can ensure the smooth running of the business after your death.
When to make a will
It is common to think that a will is not needed if you're young or don't have much of an estate. However, the sooner you make one, the better.
In addition to detailing your chosen beneficiaries, you can also make funeral arrangements and stipulate what you want to happen to your body. In other words, a will can cover almost everything, so if you want to have any say in what happens to your possessions or yourself after death, a will is one of the most important documents you can ever have.
Blog supplied by Rob Martins of Cheesmans Accountants. As company secretary senior, he deals specifically with wills, probate and lasting power of attorney, plus all legal and compliance requirements of limited liability partnerships.