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Business Will: How can you create certainty during uncertain times?

Business Will: How can you create certainty during uncertain times?

Right now, if you are a business owner navigating through the pandemic, you may have real and overwhelming concerns about the pathway ahead, especially regarding financial planning. Whether your business is small or large, expanding or treading water, national, local or an intergenerational family business, how can any owner protect what they have built against risk?

It might surprise you to know that making a comprehensive Business Will can protect both your business interests and personal affairs against the unexpected, including an avoidable inheritance tax bill if you pass away. Quite often, professional services are viewed separately, when by closely working together, they can bring improved protection and potential tax savings for clients.

Two key areas which can reduce risk both now and in the longer‐term concern financial and legal planning. The essentials required to protect you and your entire estate include:

  • Asset protection
  • Inheritance tax planning
  • Estate planning
  • Shareholders’ agreements
  • Lasting power of attorney and more (depending on individual needs)

Essential legal ‘insurance’ guarantees protection

In legal terms, if you are temporarily or permanently unable to organise your affairs or make your own decisions, this can have ramifications for tax, business continuity, property assets, inheritance, and financial management. Having a comprehensive Lasting Power of Attorney (LPA) document in place can legally set out what you would want to take place if anything unexpected happens to you. It may even be worth considering appointing your Accountant as an Attorney.

Similarly, an estimated 60% of adults in the UK are yet to make a Will.

A Will empowers you to decide upon your wishes to be carried out as you would want them to be. For loved ones, this also reduces stress and anxiety during an already difficult time after you are gone.

Also, of concern for those without an up to date Will are family disputes.

Common situations where this can arise involve people who have remarried, or are cohabiting (unmarried couples do not have the same legal protections as a married couple, as there is no such thing as a ‘common law’ wife or husband).

Insurance in other areas of life including your home and car bring peace of mind. So, what if you could guarantee protection for yourself, your business, and your family?

Building security for the short and long term

A standard Will can protect you, however, it might not protect your business. A Business Will is different. It is the only holistic solution that covers your whole life interests.

Why is this important?

As well as legally and financially covering the things in life you most value, when speaking with business owners, we ask: What would happen if you were unexpectedly out of the business for any reason?

To illustrate, a client was recently hospitalised for a while. This surprise event caused significant business interruption as this owner was suddenly unavailable for the day‐to‐day running of the business.

Reflecting on this situation, Ruth Heap, Partner at Hillyer McKeown says:

“This was a very emotional time for Mr S, on top of other life events. While he was out of the business, he had no input into financial decision‐making which will have a lasting effect on the future direction of the business.

“Unfortunately, another client, Mr A, sadly suddenly died, leaving his family with a huge inheritance tax bill no one expected or wanted. And on top of this, his second wife was legally entitled to assist with running the business, potentially creating additional upset and disruption for the Board.

“In both situations, having a Business Will would have brought peace of mind and certainty. Mr S could have had an LPA in place naming an Attorney he knew and trusted to make financial decisions on his behalf. A shareholders’ agreement would have ensured protection and stress‐free business continuity for Mr A.”

What are the legal benefits of a Business Will?

As a business owner, you might have considered business continuity, given no‐one can ever be certain that ‘nothing will ever happen’ to them. Here are three common legal concerns addressed by a Business Will:

1.      A shareholder agreement: allowing you to decide what would happen to your shares, business finances, and who would take your business forward if you are unable to

2.      A cross‐option agreement: meaning only your trusted partners and shareholders in the business can buy out your shares, should the worst happen to you

3.      Business insurance: offering support should anything happen to you or another shareholder

Without legal protection, by default, the law would determine who becomes responsible for the business you have grown and nourished.

What are the financial benefits?

This type of Will brings substantial inheritance tax benefits that you cannot gain with a standard Will. Without a Business Will in place:

  • A large proportion of your business assets, finances etc. will go towards paying an Inheritance Tax bill in the future
  • If your estate is left to a spouse and they sell your business for a cash sum, when they eventually pass away, 40% of the chargeable aspect of the estate will form an Inheritance Tax bill for your children (correct at time of publication)
  • Your business interests and assets will not be left in a discretionary trust to be passed on directly to who you decide upon after you pass away

In short, without a Business Will - you are leaving things to chance.

It is affordable and straightforward to put plans in place so your business can continue to run without interruption, in safe hands. Your loved ones can also be reassured if the unexpected were to happen.

Which professional support is the right support?

Finding the right legal team to assist you with the professional aspects of your business can be difficult without a trustworthy recommendation.

The experienced team at Hillyer McKeown Solicitors are well established and have been independently granted Investor in Customers gold standard accreditation for two years running, and also has a Service Level Guarantee.

Ruth Heap
Written by: Ruth Heap -
Follow Ruth:
Ruth (TEP), Partner and Head of Private Client Services, based at Hillyer McKeown Solicitors Chester office, is a specialist in estate and inheritance tax planning, Wills and Trusts. She is a STEP member, an international network of experts.

This article was written for Handpicked Accounts by Ruth Heap of .

David Tattersall
Speak to a Handpicked Expert today
0800 063 9258

Hi there - I'm David from Handpicked Accountants. If you need help finding the right accountant, simply give me a call. My expertise is in connecting business owners with the very best professional services and I'm on hand to assist you today.

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