Why Business Owners Need To Have A Will

Additional documents such as Shareholder Agreements and Cross Options agreements are also of equal importance to ensure all protection documents are clear, and that they all work together to carry out your wishes in respect of your business.

Having the right Will in place is crucial to maximise tax relief.

All business owners should write Wills to make sure their intended beneficiaries get the proceeds without any intestacy delays.

Shareholders in Limited Companies will typically qualify for 100% business property relief for inheritance tax (IHT) purposes.

Shares in an unquoted trading company which have been held for at least two years will qualify for this relief.

If the shares are left under the terms of the will to the surviving spouse/civil partner, the relief has effectively been wasted since the survivor will benefit under spouse exemption but will then hold cash which is fully subject to IHT when they then die.

Where business property relief is available, the business assets may be left to a will trust. In this way, the relief can be used and ‘crystallised’.

A discretionary trust will allow a range of beneficiaries, including the surviving spouse/civil partner, to get benefits from the trust. In the meantime, the trust fund will not fall within their estate for IHT purposes. In addition to the potential IHT savings, the trust may keep the funds outside of the survivor’s estate for long term care purposes.

A bypass trust is a discretionary trust where the shareholder’s children and spouse/civil partner will be included among the discretionary beneficiaries. The trustees can then pay income, capital or even make loans to any of the beneficiaries. The trust will be taxed under the relevant property regime.

What is crucial is that you make an informed decision, know your planning options, and get the right advice. This is where we add real value as specialist advisors. 
We can come to you at work and present your options to ensure your Wills protect your business asset, your family and maximise tax planning opportunities.

Note

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. 
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation.