My Will is My Business
Why it’s important business owners get organised before a potential second wave.
No matter what your interest in a business – owner, director, partner or sole trader – it makes sense to protect the future of that business.
Having an up to date Will and a Lasting Power of Attorney is a way you can protect your business and your family.
Depending on the structure, some types of businesses are exposed during the administration of an estate because there are limitations on what can be achieved until probate is granted and the estate is finalised – this can take many months, if not longer.
“You don’t hesitate taking out insurance to safeguard against unforeseen problems, but don’t consider if you were to die or become incapable of running things and how this would affect your business,” said solicitor Sarah Finnigan, who specialises in business wills, trusts and estate planning for business owners.
“Without a Will your estate will be distributed in accordance with the rules of intestacy and often the people who would benefit under these rules are not the people you would choose and there may be detrimental tax consequences. The good news is your death doesn’t have to mean the demise of your business – and making a Will is actually easier than most people realise,” said Sarah.
“Your health also comes into consideration and capacity is something that unfortunately can affect anybody at any time. As a business owner, it is important to make sure that the operation of your business is not adversely affected and of course the easiest way to achieve this is to make a Lasting Power of Attorney (LPA),” she added.
A property and financial affairs, or health and welfare LPA is a legal document allowing you to appoint an Attorney who can make decisions and act for you if you ever lose mental capacity in the future and it is possible to make a 'Commercial’ LPA, purely for the purposes of running your business.
Having this commercial document in place will ensure certain business operations can continue. The Attorney will be able to vote at shareholder meetings as if they are you or make decisions you would make as a partner in a business such as paying wages, signing cheques or entering into contracts. Without this, the effect on your business could be disastrous as no one would be legally entitled to manage the business. The only option then available would be for an application to be made to the Court of Protection to get the authority to manage the business, but such applications are time consuming and expensive.
“Making an LPA is just another way to protect your business and, like any form of insurance, is invaluable,” said Sarah. “These unprecedented times have prompted business owner clients to make contact with us as their trusted legal and financial advisers, their minds having been focused in a way only a pandemic could, they’re now not putting off the important decisions about their family’s future financial security.”Subscribe to our newsletter
Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.