Writing Your Business Shares Into Your Will

Over half of British small business owners do not include instructions on what to do with company shares in the event of their death.

According to Legal & General’s “State of the Nation’s SMEs” report, “51% of UK business owners leave no instructions about company shares in a Will”. This leaves a large number of businesses at risk of closure in the event of the owner or a director’s death. Just 26% of shareholders said that they would purchase the remaining shares should a fellow shareholder die (over half would need to use personal money to do so). Just 41 per cent of companies surveyed had a shareholders’ agreement and around a third had reviewed business arrangements since it had been formed.

Failing To Prepare

Less than 2 in 5 of those surveyed in the report had considered how a life policy could help them, with 1 in 5 saying they believed that their beneficiaries would inherit their shares automatically and then become active within the business. The reality is, that without properly preparing for the death of a shareholder, however unlikely, shares could become tied up in probate, bringing business operations to a halt. Shares may also have to be sold to a competitor, taking control of the business away from remaining shareholders. A shareholder protection agreement is a simple way to avoid any fall out from the death of a large shareholder.

By discussing your business in relation to your Will with a financial adviser, you can discover the best options when it comes to protecting your company. Take a look at our Will & Estate Planning services to see how Charles James can help you. You can also get in touch with us via our contact page.