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Advice on leaving a business or shares in your will

Having a valid and up-to-date will in place ensures yours and your family’s wishes are clear and comprehensive, but how can a solicitor help leave a business or shares to someone in your will? Here, Battens Solicitors’ Private Client Solicitor, Deborah Escott-Watson, discusses the issue:

  • What, if any, would the impact be on your business or shares if you died without including them in your will?

A business asset or a share in a business, if you do not specify them in a will, would be treated as any other asset that you own and pass to your residuary beneficiary in your will. This might mean that a beneficiary, or multiple beneficiaries, with no interest or the relevant skills inherit your business, which could drastically reduce the value of the business for the next generation, or reduce the income generating potential of the business for the family you have left behind. Your executors might also choose to sell business assets to pay for your estate debts if the business asset is not specified to go to a particular beneficiary.

  • How can a solicitor help you leave a business or shares to someone in your will?

A solicitor can draft a valid will taking into account your wishes with regards to business succession and putting an effective plan in place to ensure that the person you wish to inherit the business, does so.  A solicitor can also help with ensuring that your will is not in conflict with any contractual obligations that must be taken into consideration with regards to the business, for example the Articles of Association of a Company and a Shareholder’s Agreement. A solicitor can also help with ensuring that available tax reliefs and exemptions are maximised. Building a successful business takes a lot or hard work and sacrifice and a solicitor can ensure that this business provides maximum benefit for your family whether it be in cash on sale or as an ongoing concern.

  • Do other shareholders have to accept a new shareholder if you leave shares in your will?

Not necessarily. Shareholders of a business can enter into a Shareholders Agreement. This agreement can include provisions as to what happens when a shareholder dies. This agreement will take precedence over provisions in the deceased’s shareholder’s will if there is a conflict between the two documents. This might mean that the shares left in a will cannot be transferred to the beneficiary in a will, unless the other shareholders agree. There might also be an option for the other shareholders to purchase the shares of the deceased shareholder. These are all matters that that a solicitor can assist with and provide advice on.

  • What disputes can arise when leaving a business or shares to someone in your will?

The beneficiary may not be aware that you have decided to leave the business to them and may not wish to continue with it on your death. The surviving shareholders may not wish to work alongside the beneficiary in the will causing a dispute. The executors may wish to sell the shares to a third party and, depending on the terms of any shareholders agreement, the remaining shareholders may not be in agreement with this, causing a dispute,. The remaining shareholders may not be able to find the funds necessary to purchase the deceased’s share which will also lead to problems for the executor. A solicitor can assist with putting a plan in place to ensure that these potential disputes are minimized, and most importantly your wishes can be given effect to, and your family receive maximum benefit.

  • What inheritance tax issues should someone leaving a business in their will be aware of?

Business Property Relief is a valuable relief for Inheritance Tax purposes. The value of a business or shares in an unlisted business can qualify or 100% relief, and even property owned by the deceased in his personal capacity, and used by a business in which he is a partner or controls, can qualify for 50% relief. There are conditions that must be met, for example the deceased must have owned the business asset for two years or more and the business must be used for commercial gain to qualify for the relief. There are certain types of business that do not qualify for the relief, for example a business whose sole purpose is commercial or residential property letting.  A solicitor can help ensure that all relevant reliefs are discussed, and provide advice as to whether they can be claimed. This will help with planning and ensure that there is no nasty tax surprise.

For more information contact Adam Hillier on 01935 846165 or email

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