<p>If you are a business owner, you have doubtlessly shed a lot of sweat and tears into the fruits of your labour and would either like to leave a legacy behind or sell your business or shares to make provision for a cushy retirement.</p>
<p>However, what happens when the worst comes to pass, and you die unexpectedly? What happens if your business partner is to die before you? Who would be entitled to a share in the business, and if you are considering leaving a share to your family, should you? These are not easy questions to ask, but advance planning can ensure that you have a contingency plan and that your beneficiaries (and directors, where applicable) are looked after.</p>
<p><img src="https://localsolicitorspace.ams3.cdn.digitaloceanspaces.com/guide/business-meeting.jpg" alt="Business meeting" width="805" height="450" /></p>
<p>There are approximately 5.7 million businesses across the UK, from small one-man operations to massive conglomerates. Whatever the size of your business, it is still important to accommodate for your business in your Will if you wish to remain in control over what happens to it.</p>
<p>First, we need to consider different types of businesses.</p>
<h2>A Sole Trader</h2>
<p>As a <a href="https://www.localsolicitors.com/company-and-commercial-guides/the-advantages-and-disadvantages-of-being-a-sole-trader">sole trader</a>, all assets in the business are owned by you, so this is the easiest type of business to deal with in the Estate. What is to become of the business is entirely up to you &ndash; it can be liquidated and distributed among beneficiaries, or it can be left behind as a legacy for someone else to take the reins. If you wish to leave your business as a gift, you should consider getting additional legal advice.</p>
<h2>A Limited Company</h2>
<p>All limited companies have a memorandum and articles of association, which generally stipulates what will happen to your shares if you pass away, so it is important to refer to the articles first, before drafting your Will. If the articles of association detail what is to happen to your shares, it will overrule your own private wishes as per your Will.</p>
<p>If the articles are silent on the matter, and you are a co-owner, you could stipulate that your interests should revert to your spouse or children, if your family has any interest in becoming shareholders. Alternatively, your shares can be sold and divided among your beneficiaries.</p>
<h2>A Partnership</h2>
<p>As part of the standard practise when entering into a partnership is to sign a Partnership Agreement that will already state what is to happen when one partner passes away. As with a limited company, the agreement will overrule any contrary wishes in your Will. If there was no agreement in place, the business can be forced to close when any one partner dies.</p>
<h2>A Limited Liability Partnership (LLP)</h2>
<p>Unlike a partnership, an LLP can continue trading when one partner passes away, but the partnership agreement will still be held valid over and above your Will. Before you draft your Will, you need to refer to the agreement to make sure that your final wishes align with what was laid out in the agreement. Typically, the business will revert to the remaining partners, and not to your beneficiaries.</p>
<h2>Inheritance Tax Implications</h2>
<p><a href="https://www.localsolicitors.com/personal-finance-and-tax-guides/guide-to-inheritance-tax">Inheritance tax</a> is payable on your Estate if it is above a certain threshold. Including a business in the Estate can easily bump up the threshold, so a solicitor can guide you how to best incorporate this into your Will. Tax is sometimes payable on gifts made (leaving your business to a beneficiary is considered a gift) and the tax payable can be as high as 40% on a threshold of &pound;325 000. However, there can be some relief even when the Estate reaches its threshold, and one of the reliefs include Business relief. It is therefore imperative to ask for legal assistance when gifting a business in a Will</p>

A look at what will happen to your business if you die, including the impact of death on different business types, inheritance tax implications and more.

What Will Happen to My Business if I Die? LocalSolicitors.com