Business owner

A leading law firm says business owners - such as electrical contractors - are risking big problems for their business partners and family by failing to make a will...

 

"Many businesses are family run with the intention that the business should pass to another family member working in the firm,' he said. "Often a child working with a parent in the family business will have an expectation that the business will come to them. Where this is not covered by a Will, families can quickly fall out. The child working in the business may be expected to purchase their siblings shares even if the other siblings have never worked in the business or contributed to its success."

Houghton said in his experience many business owners do not make a Will, which prevents significant tax savings being made. "Businesses can qualify for an exemption to inheritance tax, the benefit of which is lost if assets pass to the surviving spouse outright,' he said. "If a business is sold on death and if the proceeds of the sale pass to the surviving spouse they will be in their estate for inheritance tax purposes. Careful planning can ensure that the surviving spouse can still benefit in full from the proceeds of sale but without them being taxable on their death. Tax savings can typically be 40% of the proceeds of sale of the business."

Houghton also said it is important to ensure the Will fits the structure of the business: "In circumstances where the business may be subject to a partnership or shareholders agreement care must be taken to ensure any Will is compatible with the terms of the agreements and that the agreements themselves do not prevent the tax reliefs being claimed."

He warned against people writing their own wills saying they can create unexpected costs as the wording can be challenged: "The benefit of making a Will with a trust and tax specialist is that they have the experience to look at the whole picture,' he said. "They understand the interaction of the business with the Will to ensure that any planning undertaken will be fully effective."

Mace & Jones stressed it has dealt with cases where wills have either not been updated, or not existed at all. The cost of resolving these cases in court far exceeds the cost of drawing up even the most complex Will.

Britons who haven not made wills - regional figures:

London: 68%
The South: 59%
Midlands and Wales: 65%
The North: 66%
Scotland: 67%