Business Succession Planning and Wills

Business Succession Planning and Wills

Posted 02 November, 2019 at 16:59

Author Michelle Garner on behalf of Sally Herdman International Services


Some of the obvious questions which arise when a business owner dies are-

  1. Does the deceased spouse inherit ownership and go into business with the surviving owners?
  2. How is the surviving spouse paid out if they don’t want to become a business owner?
  3. How do the other owners pay out the spouse if they don’t want them as a co-owner?
  4. How is the business valued?
  5. How is the debt of the business paid?

All very important issues for both the business and the family when a business owner dies.

Key Priorities for effective business succession are -

  1. Ensuring the daily management and control of the business is not jeopardised and a plan is in place for the business continuation
  2. Ensuring the ongoing financial viability of the business and debt repayment, particularly personal guarantees given by the deceased owner.
  3. Addressing the needs  of the surviving owners
  4. How to fund the transfer of ownership of the deceased’s share from a surviving spouse
  5. Any tax implications such as capital gains tax
  6. Minimising disruption for everyone

Early planning for the event by means of a business will

A Business Will is an agreement which usually is a  buy and sell option. It ensures that there is a known route of transfer of the deceased owner’s share of the business back to the surviving owners. Critically this agreement must be tied to the method of funding the buyback of the business share.  This is commonly done using appropriate life insurance policies.  In order to gain maximum tax advantage, it is vital that independent financial advice and expertise is taken when sourcing these policies.

Clearly there is a great deal to be thought about to help smooth succession when a business owner dies.  I am happy to help discuss these issues with you and help you plan your business will

Contact me on help@sallyherdman.com Telephone:  +44 (0)7831 379562. Visit my website www.sallyherdman.com

The Inheritance Guru

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