Small business owners – make sure your Will protects your interests

The importance for small business owners of making sure they have protected the future of their business in their Will has been highlighted by a new report.

Recently released figures by financial services company, Legal & General, has revealed that more than half of Britain's small business owners are leaving their business in a potentially vulnerable position by failing to put specific instructions in their Will or making special arrangements regarding shares.

Death of a business owner 'hugely significant'

Richard Kateley, Legal & General's Head of Intermediary Development, said: "For those established small and medium-sized businesses (SMEs) that have a presence in their chosen market, the death of a business owner can be hugely significant should there be no plan in place or an arrangement regarding company shares.

"This could lead not only to shares being tied up in probate, paralysing an SME's operations if this was a majority share, but could see the beneficiaries of these shares becoming involved in the business, whether or not they have any aptitude. Or, in the worst case scenarios, selling those shares to a competitor meaning the surviving owners lose control of their business."

What should you do?

Making a Will, and keeping it regularly updated, is key to staying in control and being clear about exactly what you want to happen to your estate, including your business, after your death.

It also helps make sure that other people involved in the business, often family members, are not left in a difficult situation.

Key things to consider are:

• Making sure your Will is clear about what you want to happen to the business and that this complements the structure of your business;
• Being clear about what you want to happen to the shares in the business on death - for example, provision for the surviving shareholders to purchase the deceased shareholders shares;
• Ensuring the people you refer to in your Will, in terms of taking the business on, are willing and able to shoulder this responsibility;
• If you are a business owner investigating a Business Lasting Power of Attorney is vital. It is important to consider what happens to your business if you lose mental capacity and whether an LPA is an option for you. Bespoke advice is needed as whether you are able to make an effective power of attorney for your business depends upon the business structure.

For advice about running your business, including a business healthcheck service, please contact Wards Solicitors' Commercial Services Team and for more information about making or updating a Will, please contact our Wills, Probate and Mental Capacity Team.