Wills for business owners

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Many of my clients have business interests, which need to be considered at the time of preparing a Will.Such interests may be in the form of a shareholding in a private family company, or an interest in a partnership, or acting as a sole trader.The type of business structure will have an impact on how the Will might be drafted and what, if any, administrative provisions should also be included.

The value of the business interest will play a key part in deciding upon the structure of a Will.If there is little or no value then a simple straight forward Will is likely to be the appropriate solution.However, if there is value in the business interest then an opportunity might exist for Inheritance Tax planning.

Provided the business interest is a trading operation, the value of that interest should be eligible for 100% Business Property Relief.If that is the case then one should consider crystallising that relief in the event of death.

If an individual wishes to leave all of his or her estate to a surviving spouse, but there are business interests, then it is possible that the relief will be lost, and unless the appropriate provisions are put in place.For example, it might be appropriate to consider passing on that business interest directly to the next generation, or directing it to a Discretionary Trust.In this way the value of that business can be passed on free from Inheritance Tax, assuming 100% Business Property Relief is available, without relying upon the spouse exemption or using the Nil-Rate Band Allowance.

The use of the Discretionary Trust option might provide a surviving spouse with access to capital and income, if required, plus the opportunity for further Inheritance Tax planning.

Whatever the circumstances, if you are a business owner,it is important to consider the terms of the Will, combined with the availability of Business Property Relief, and the options available to you.

For advice on any area of Private Client law, please contact Richard Horwood.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.