How prepared is your business if one of the owners dies? Research carried out by Legal and General* found that 37% of the 827 businesses it surveyed had no insurance cover in place to buy the shares in the event that one of its owners died. The survey was for businesses with at least two owners. This figure rose even more for small business owners, where 57% had no cover in place.
You may not think that this is too much of a problem. After all, your fellow owners will probably buy out your share of the business if you die, won’t they? Well yes, usually, but what happens if they don’t have the funds to do this?
The reality is that the business may not be in a position to continue trading at all. In addition, it may not be possible to make decisions about the business until probate has been granted and obtaining probate can be a lengthy process. Your family may not have access to the funds generated by the sale of your shares immediately either.
When Legal and General carried out the research into businesses, they also identified that more than a third of these business owners did not have a will.
Dying without a will as a business owner could cause serious problems for the people you leave behind, at an already difficult time. If you do not have a will in place when you die, your assets will be distributed under the rules of intestacy. The rules of intestacy are a statutory set of rules and list the people who are entitled to benefit from your estate. Your assets, including your business, will be divided according to this fixed set of rules, irrespective of what your intentions actually were. This may mean your estate is not divided in the way that you expect or how you want.
You can avoid this problem by preparing a will. This will not only create certainty for your family and business partners but it will also protect them from these potential issues. Your will should stipulate exactly who you want to inherit your interest in the business so it’s clear what you want to happen and how you want your affairs to managed after you die.
This research shows many business owners are not adequately planning for the future. Making sure that all shareholders or partners have made a will should be a priority and business owners should make sure they know what will happen if one or more of the directors or shareholders die.
If you need help and advice on future planning for your business, call us now on 0117 926 4121 or make a Free Online Enquiry.