As you have worked hard for many years to turn your business into a success, it makes sense you will want to pass it on to a loved one once you pass away. Yet, you might be unsure if you can leave your venture to your children, grandchildren, or other loved ones.
You might be happy to learn you can leave your business in a will, as it is an asset you possess. However, how you pass the business on is determined by its legal structure and your position at the company. Continue reading to learn how to factor your company into your will.
Write a Complex Will
Be aware that leaving a business in a will is a little complicated, as it is a significant asset, and its structure will determine how you can include it. For instance, if you are a sole trader, your business is deemed an asset and can be included as part of your estate, which you can pass on to one or more loved ones. However, if you operate a limited company, are one of many partners, or are a shareholder, you can only pass on a share of the business in your will.
The process might sound difficult, but you can simplify it with charity wills from Macmillan. However, complex wills will come at an extra charge, and it is wise to consult a solicitor during the process. You can write a will without a solicitor, but it is advisable to seek legal support to ensure your business is passed down to the right loved one(s).
Choose the Right Beneficiary
Carefully consider who you want to inherit your business or its shares after you pass away, which might be a family member, friend, business partner, or employee. If you fail to include a beneficiary for your company, it may pass on to someone who doesn’t have the skills to successfully run it or the passion to manage it.
Also, it may cause conflict between loved ones who believe they deserve to own the company. A valid will ensures everyone understands your wishes and that they will be followed following your death.
Consider the Best Structure
A loved one might not want a day-to-day role in the business, but you might still want to pass on the asset to them to secure their financial future. If this is the case, it might be best to leave your shares or place a partnership interest into a trust for one or more family members. However, your ability to pass on shares will depend on the articles of association or the business partnership agreement.
Learn About Inheritance Tax
Your beneficiaries may need to pay inheritance tax if you leave your business in your will. However, Business Property Relief might be an option for your beneficiaries, as it might be available if your company meets the qualifying criteria. As a result, they might pay less tax or nothing at all. Consult a solicitor to identify if your beneficiaries will need to pay inheritance tax when inheriting your business.
Author bio:
Elisabeth Sedgwick studied Creative Writing and Media at Edge Hill University. She’s spent the past 14 years in digital marketing, producing engaging content for various industries. As a proud mum, she enjoys writing about family, health, and self-improvement.