Why Making A Will As a Business Owner Needs Additional Planning
Making sure your affairs are in order is obviously an important consideration for anyone, but even more so if you own a business. You should take professional advice on what will happen to your business, or your share in a business, after your death.
Ownership of a business can be beneficial for inheritance tax planning purposes. An interest in a business, or assets or property used in a business can qualify for either 50% or 100% relief from inheritance tax, known as Business Property Relief. Rather than leave your business interest to a spouse, which would be free of inheritance tax in any event, there may be some tax planning opportunities to pass this to the next generation or into a trust for the benefit of the family. Such a trust does not need to be complicated but it is important that it is set up correctly in your Will and that you consider carefully who should act as your Executors, as they will become the Trustees of any trust. It is also important to take advice on how Business Property Relief will work alongside other inheritance tax reliefs which may be relevant for you, such as Agricultural Property Relief and the new Residential Nil Rate Band.
If you are in a partnership you should make sure you take along a copy of any Partnership Agreement to your professional advisor so that this can be considered alongside your Will, to make sure your partnership share passes as you would wish. There may be restrictions in the Partnership Agreement as to who can inherit your share, or whether the partnership continues after your death.
All the usual considerations when making a Will apply, ie who will be your Executors, do you wish to leave any legacies, who will inherit the bulk of your estate and in what shares? But particular consideration should be taken of a business interest if you wish to secure its future for your family, or ensure that you are mitigating your inheritance tax liability.
As well as making sure your Will is up to date, it would be worth considering a Lasting Power of Attorney for Property & Financial Affairs. This would mean that there is someone else legally appointed, who you have chosen, who could deal with business matters on your behalf should you lose mental capacity.
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