Why You Need a Business Will

There are approximately 5.9 million small businesses in the UK today. Owning a business or having shares in one can have a significant impact on your Estate planning and your Will. 

If you have not thought about what will happen to your business or have not considered any potential business agreements that may conflict with your wishes, now is the time to consider them and write a business Will. 

How Business Arrangements Can Influence Your Will

Owning or partially owning a business may change your Will more than you think. Although you can leave shares, business interests, and assets to whomever you would like, it is crucial that your chosen beneficiary wants them and knows what to do with them. For example, if you are leaving your company to your child and they do not know how to run a business well, the company could be at risk in the future.  

It is also vital to ensure that the beneficiary of your business or shares does not have any conflicting interests with any other owners or partners. Shareholder agreements, partnership agreements, and articles of association may also be limiting factors on how your business interests will be inherited. 

If you are in a business partnership, it may be slightly unclear what will happen to your assets. Your interest in the business will pass to the executors of your Will, and the specifics of your partnership agreement will influence how they are managed. For example, other partners within the business could have the option to buy your shares first, or the executors may have the right to require the other partners to purchase your interest.

If you are not aware of the agreements set out by business partners or articles of association, this can lead to many complications and disputes, including:

  • The remaining shareholders being unable to find the funds to purchase the deceased’s share 
  • The remaining shareholders refusing to work with the beneficiary of the business
  • The remaining shareholders disagreeing with the sale of any shares left in the Will to a third party

Therefore, it is important to clarify what is and what is not acceptable within the business to minimise the risk of these disputes. 

If you are a sole trader, your business will end when you pass away. However, your business assets, such as any stock and office equipment, will be counted as part of your Estate, which can then be left to any beneficiaries in your Will. 

Having a Will is essential for business owners, no matter what type of business they have. Without a Will, your business will be subject to the rules of intestacy. These rules could mean that your business passes to someone you do not want to run your business or somebody without the skills to run it properly. 

Businesses and Tax

Passing on your business via your Will can have some hefty Inheritance Tax (IHT) consequences for your Estate. Your executors may even have to sell business assets, shares, or interests to be able to pay it. 

However, some business assets are IHT free, as they count as Business Relief. Business Relief helps to reduce the value of a business or its assets, which reduces the IHT when it is passed on. 

You can get 100% Business Relief on:

  • Shares in an unlisted company 
  • Interest in a business
  • A business

You can also get 50% Business Relief on:

  • Shares that control over 50% of voting rights in a listed company
  • Buildings, land, or machinery that was owned by the deceased person and used in a business that they controlled or were a partner in
  • Buildings, land, or machinery used in business and held in a trust that it has the right to benefit from

To qualify for Business Relief, the deceased must have owned the business or asset for at least two years before passing away. Several things do not qualify for Business Relief, including:

  • Not-for-profit organisations 
  • If the business is being wound up, unless this is part of the process that will allow the company to carry on
  • Assets that also qualify for Agricultural Relief

You can also mitigate the amount of IHT payable by gifting assets that qualify for Business Relief throughout your life. 

Leaving Your Business in Your Will

If you have decided to leave your business, shares, or assets in your Will, it is vital that you are clear on the terms and conditions around your partnership or ownership. If you own an interest in a partnership, a properly drafted partnership agreement is essential. It can affect what happens to your interest after you pass away, so familiarise yourself with the terms.

If you want to pass on shares, the articles of association may restrict you from doing so. However, you may be able to change the articles of association to enable you to pass on your shares. If you can’t, an alternate route you could take would be to sell your shares.

Alternatively, instead of leaving your business or business interests to your loved ones in your Will, you may choose to leave them in a trust. Trusts allow you to appoint trustees and beneficiaries, with the trustees managing the trust for the beneficiaries. This would allow your loved ones to benefit from your business without being directly involved. 

Leaving your business assets in a trust may be the best choice if your loved ones do not want to or are not qualified to run a business. 


Business Wills can be tailored to your exact needs as a business owner and help you to take care of your beneficiaries into the future. Whether they inherit the business outright or within a trust, business Wills can help you protect your business and provide for your loved ones. 

Contact The Planning Bee today for more information about business Wills, trusts, and Inheritance Tax. Our expert paralegals have decades of experience within the Will writing industry and will help you plan for all your future needs.

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