At the beginning of 2015 there were an estimated 5.3 million small or medium sized businesses in the UK. It is therefore very important that business owners create an effective Business Succession Plan to protect their business and decide what happens to their business in the event of their death or should they no longer be able to manage their own affairs.
For business owners a simple Will is probably not sufficient. In that case, a more comprehensive Business Will is more appropriate in dealing with their specific business assets. A business owner may wish to appoint separate executors, known as business executors, to deal with their business interests. The key benefit of appointing business executors is that they will possess specific knowledge and expertise allowing them to deal with specified business interests effectively. It is important to note that business executors have similar duties to normal executors but their powers are restricted solely to business assets.
Partnership and Shareholder Agreements
In respect of partnerships appropriate business succession planning is essential. Without a Partnership Agreement in place a partnership may be dissolved upon the death of a partner. A formal Partnership Agreement, properly drafted, may allow a business to continue to trade and can give a surviving partner the ability to purchase the deceased partner’s shares from the personal representatives of the estate. It is also important to consider the benefits of a Shareholder Agreement to determine what should happen to a shareholder’s shares in the event of their death, or to prevent a shareholder’s heirs inheriting and owning a portion of the business. This, of course, needs to be decided on a case to case basis.
Business Lasting Powers of Attorney (LPAs)
What if a business owner should become unable to manage their business affairs for any reason? In a recent article entitled “Business Lasting Powers of Attorney – Could your business run without you?” I have discussed this issue in detail. Please click this link to read the article.
Please get in touch if you have any further questions about Business Wills, Partnership and Shareholder Agreements and/or Business Lasting Powers of Attorney.
I, Amanda Harris, am a member of the Society of Will Writers and follow the Code of Practice laid down by the Society and all work is covered by Professional Indemnity insurance. I can also offer a secure storage and retrieval service for your documents.
A portion of this article was provided by the Society of Will Writers.