We all have a number of tasks in our lives that we intend to ‘get around to sometime’, and for many of us, the creation of a Will falls into that category. It’s understandable; few of us are keen to contemplate our own mortality, and many aren’t even really sure how to go about completing this exercise.
With a recent study finding that over half of the British adult population have no valid Will (source: Which/Royal London) – and that 5.4 million people don’t know how to go about writing one – it’s clear that large numbers of people are still in the dark about the process and its importance.
For those who own a business, either alone or with a business partner, things might seem to be more confusing. Simply put, who gets the business when you pass on? What happens if you die while your business partner owns half of your company – and what happens if you don’t write a Will?
Why write a Will?
If you pass away without having written a legally valid Will, your estate will pass into intestacy. This means that the law gets to decide how your money, property and possessions are divided up (usually between your spouse, children, other family members, or – if these options don’t work – the estate goes to the Crown as a last resort).
For entrepreneurs, this means that the ownership of the business may not pass to the desired person by default. For example, if the enterprise was started with a 50-50 business partner, you may wish that your business partner gets your half of the business after death rather than your spouse.
If you’re not married, and you have no living relatives, you might think that your ownership of the business would logically transfer to your business partner by default, but that isn’t the case – you have to expressly state their entitlement to it in your Will, or they won’t have any claim at all.
If you do leave the business as a gift to your family, it’s still advantageous to write a Will in order to have control over how it and the rest of your estate are distributed between your spouse, children, parents and so on – otherwise, the law will decide who gets what (with the lion’s share most likely going to your spouse).
It’s also very important to know that a long-term relationship partner will have no automatic entitlement to any part of your estate after your death if you weren’t married or living in a civil partnership – you have to name them in your Will in order for them to have any claim, otherwise intestacy laws will mean the rightful claim automatically goes to your relatives.
The process of writing a Will
By writing a Will, you can ensure that your wishes will be upheld after your death and that control of your business will pass to the correct person or people. But how is this task best approached?
Depending on the complexity of your needs when writing your Will, a variety of options will be available to you. Of course, as a business owner it will be very important to ensure that the Will is properly written and legally binding, and enlisting the help of an experienced solicitor is a must.
A good solicitor will talk you through all of the considerations and ask you questions about things you might not have foreseen – and whether circumstances you may not originally have thought about might have some bearing on your wishes.
In order to be legally binding, the signing of a Will must be witnessed by two other people who wouldn’t stand to claim anything from it in the event of its execution. You will also need to nominate a person to be the executor of the Will – in other words, the person whose responsibility it will be to ensure that your wishes are carried out as written.
Despite the widespread uncertainty about the practicalities of Wills – and the mystique that seems to surround the process of creating one – it’s a relatively straightforward process to undergo with good professional help. Given that the future livelihood of your family, business associates and friends may depend on it, it’s vitally important to get it done sooner rather than later.
Things to consider when writing a Will
One aspect of leaving your business to your family in your Will is that they may decide to sell it, and if you have a business partner your relatives are under no obligation to sell your portion of the ownership to them in particular. This may create an uncomfortable situation where your business partner may be forced to negotiate with your grieving spouse and family for ownership of the business you built together.
It may be worth thinking seriously about the exact nature of your wishes – whether you want your family to have your stake in the business purely as an asset they can use for their financial needs, or whether you are passing the torch of a family business that you intend for your spouse and children to operate after you’re gone and keep your vision alive.
For some people, it may be difficult to name an executor – for example, if family members don’t get along or don’t have a great relationship with the Will writer. In these instances, it may be practical to employ a professional executor to carry out the instructions.
It can be important to talk to your family about your succession plans for the business sooner rather than later, especially if leaving more value to some family members than others. This could help them to understand your reasoning and not leave them to be surprised when your Will is later executed.
Ultimately, the writing of a Will is something that a business owner should ideally take care of as a matter of priority. Few things in life can be as important as assuring the ongoing welfare of your loved ones and associates – so don’t leave it to the law to decide what happens to your company.
Writing a Will as a business owner needn’t be mysterious or difficult, and with the help of experienced professionals you can ensure that your wishes will be preserved in a properly drafted and legally binding document – and that the people closest to you will be looked after in the manner you feel is best.
This post was contributed by Girlings Solicitors – expert business and personal law solicitors based in Canterbury, Ashford and Herne Bay. With over 100 years of experience providing a broad range of legal services, Girlings is one of the largest and oldest law firms in Kent.