If you own a business, you need to think about what will happen to your business when you die.
What happens to my business when I die?
Generally, your interest in your business will form part of your estate passing under your will.
Precisely what will happen depends on the type of business you have and any agreements in place to govern your business.
These are the simplest businesses to leave in your will, as any assets used for business purposes are still owned by you. The main thing to think about here is who you might want to continue running your business when you die.
When a partnership is formed, a formal partnership agreement usually goes along with it. This sets out what will happen to a partner’s share of the business when they die. The terms of this agreement will override any wishes stated in your will, so make sure you take the time to read the initial agreement. If you didn’t create a partnership agreement and there isn’t one in place at the date of your death, the partnership can be forced to cease trading when a partner dies.
All limited companies have both a memorandum and articles of association. These specify the purpose of the company and how it should be run – the articles of association may also say what should happen to your share of the business when you die, so it’s important to read these documents when making your will.
Limited liability partnerships
All limited liability partnerships should have an LLP agreement or LLP members’ agreement. This is designed to make sure the LLP can carry on if one of its members dies. If you’re a member of an LLP, familiarise yourself with the terms of your agreement.
Do I need legal advice?
Owning a business doesn’t necessarily mean you can’t write your own will with Farewill.
It’s your choice, but here are some scenarios where you should consider getting legal advice:
If you need help understanding, or putting into place, agreements governing your business
If you want to make a gift of your business specifically, rather than it being split among your beneficiaries along with the rest of your estate
If your estate is large enough to pay inheritance tax and you want to make the most of reliefs available for business assets
If your business is a farming business
Need more information?
At Farewill, we provide general guidance rather than specific legal advice. Whilst this is suitable for most people, if things are more complicated, we’re probably not quite the right fit.
If you need specific advice about your business give us a call on 020 8050 2686 and we'll put you in touch with an expert legal team able to advise you and write your will over the telephone.