With the myriad daily requirements that a business owner has to deal with they often don’t consider the necessary steps to ensure their business is protected in the event that they should die or become incapacitated, either permanently or temporarily. Of course these are not easy things for any of us to think about, so it is quite natural not to focus on them.
Writing a Will and Lasting Power of Attorney can help address these two important areas and provide peace of mind as well as protecting your business for the future.
Wills for business owners
For business owners, it is vital that their wishes with regard to their business are clearly registered and reflected in their Will to protect all parties involved in the event of their death.
Wills should specifically reference the business itself and what the individual wishes to happen to the ownership and underlying assets. If someone dies without a Will, their estate will be dealt with under the laws of intestacy. This means that the business could be split between a number of beneficiaries and the individuals who you would want to continue the business may be forced to sell or wind it up if they do not have the funds to buy others out of their share.
Having a properly drawn up Will is the way to prevent this from happening. Professional advice is key. Your Will should be written by a solicitor who can discuss and understand your wishes to ensure the Will is written correctly. Family members and business associates should be made aware of your wishes and that a Will exists. This will help prevent any surprises and ensure the Will is enacted on death.
Considering Inheritance Tax
Business owners should also consider Inheritance Tax. This may influence how and to whom assets, including personal wealth as well as the business, should be left. A Financial Planner can work in conjunction with you and your solicitor to minimise tax within the boundaries of your wishes.
There is also the opportunity to write a letter of wishes alongside your Will to assist your executors.
Once it is completed, you should ensure that you regularly review your Will. Circumstances often change as time goes by and these may need to be reflected in an updated Will.
Lasting Power of Attorney (LPA)
If you become incapacitated, either for a short period of time or permanently, a Property and Financial Affairs LPA will allow your attorneys to continue to operate your business and make the necessary day-to-day decisions to protect your interests. Attorneys are held accountable for their actions through the Office of Public Guardian and there is a code of conduct for them to follow when making decisions for an individual.
You are able to appoint, family, friends, business partners and professionals, to act; either jointly (meaning all decisions must be agreed by everyone), or jointly and individually. You can make separate LPAs for personal and business affairs if you would prefer that different individuals were appointed.
Once again, you should seek professional advice to ensure your wishes are clear and can be enacted and LPAs should be reviewed regularly. LPAs must be registered with the Office of the Public Guardian before they can be used. You are able to revoke and replace the LPA, providing you still have the mental capacity to do so.
The Financial Conduct Authority does not regulate Will Writing, Tax Advice or Estate Planning.
By Simon Valentine-Marsh, Chartered Financial Planner