Alex Sealy, a wills and probate solicitor at North West law firm Slater Heelis discusses what business owners should consider before writing their will;
Most owner-managers usually have a good idea of their estimated net-worth. By watching both their assets increase in value along with their annual accounts tick over, they’re generally able to accurately predict how much their business is worth.
These days, it’s not unusual for this net figure to be quite substantial. With property price inflation, lots of small business operators with paid-up mortgages find themselves to be paper millionaires.
Those who have taken the decision to buy their business premises at some point have probably done fairly well, too.
Then there are also holiday homes and any other property which has to be considered.
As the years and decades go by, this collection of assets can provide a substantial income, an enjoyable lifestyle – and advancement opportunities for their families.
Most small business owners have worked hard their whole life to achieve a comfortable life for themselves and their family.
They’ve paid their taxes, accumulated a little wealth and provided for their families and retirement.
Assessing the Value
Getting professional advice about passing on assets can spare unnecessary loss, trouble and conflict in the aftermath of a business career.
Seeing a qualified and reputable advisory firm about mitigating the worst effects of inheritance tax, IHT (or ‘death duties’, as they used to be described) is essential.
Taking early steps to make sure as much of your accumulated worth can be passed to your descendents, or others of your choice, can make a substantial difference to your eventual legacy.
It’s vital to not leave it until it’s too late to decide who is to benefit. Attend to it while you’re fit, strong and in full command of your mental faculties.
Planning your legacy
Before you start to write your will, you need to make some important decisions surrounding what you want to achieve.
Is your priority to provide for the wellbeing of your spouse? Or are your children and grandchildren a more important consideration? Will you be making provision for each of your children equally, or will there be differing emphasis depending on their circumstances?
If you don’t make your intentions clear, in a legally recognised and signed will, either your probate executors or the Courts will stick to the rigid formula laid down by law and divide your wealth appropriately.
Your feelings and wishes will count for nothing. Ex-marital partners, ex-cohabitees, stepchildren and distant relations could all decide to surface and join the queue as your wealth is redistributed.
Weighing up options
You may choose to leave shares or a ‘commercial’ reward to those who have loyally supported your business over the years to ensure its survival, by re-directing assets to co-directors, long-serving employees or minority shareholders. They could end-up owning and running your business.
Others may prefer to sell the business and know that the product of their lifetimes’ efforts will be directed toward something close to their heart such as a charity.
Or you may want to do a combination of all these things; some money for your family, some for your staff, a proportion for good causes or some for special purposes.
Making a will is a recognition that the wealth you have accrued is yours.
When you depart, you want to do so in the knowledge that your descendants or legatees will use your wealth in a manner you have chosen.
For this reason, it’s vital that you see an experienced solicitor who can guide you through the process smoothly.
Kizzi Nkwocha is the editor of Business Game Changer Magazine and publisher of The UK Newspaper, Money and Finance Magazine, the net’s fastest growing wealth creation publication. Kizzi Nkwocha is chair of The Ethical Publishers Association and co-chair of The Logistics Association. Kizzi made his mark in the UK as a publicist, journalist and social media pioneer. As a widely respected and successful media consultant he has represented a diverse range of clients including the King of Uganda, and Amnesty International. Nkwocha has also become a well-known personality on both radio and television. He has been the focus of a Channel 4 documentary on publicity and has hosted his own talk show, London Line, on Sky TV. He has also produced and presented both radio and TV shows in Cyprus and Spain.