Dealing with your will and ensuring your nearest and dearest are taken care of once you are gone is one thing, but for entrepreneurs particularly, special attention should also be given to how and to whom their business – or shares in their business – will pass.
First instincts
Your first instinct could be to leave the business to your significant other so they decide what to do with your shares. Or you may simply think it is enough to leave your shares in the business to become available to the other shareholders.
Yet if much of your wealth is bound up in the business itself, you also want to ensure your family gets the benefit you intended from all your hard work. Sadly, many entrepreneurs fail to make proper arrangements in advance of their death to deal with these issues, especially if they die unexpectedly.
An entrepreneur cannot dictate exactly how his or her business is run after their death Amish Patel, Royds Withy King
Tim Walford-Fitzgerald, private client partner at HW Fisher, says: “It is very common for people not to plan. For many entrepreneurs and business leaders, they assume they will have already sold out or wound up their business before death. It is also a difficult topic to discuss; very often they don’t want to upset family by implying that they can’t run the business and don’t plan at all.”
Lack of planning
Amish Patel, associate at law firm Royds Withy King, says this lack of planning can lead to a number of issues arising on death, “including the business ceasing trading/losing value and goodwill”.
He adds: “An entrepreneur cannot dictate exactly how his or her business is run after their death as this will depend on a number of factors, including the economic climate. However, the entrepreneur can appoint people he or she trusts as executors – who may in turn also appoint people with the necessary expertise in the business – to make sure the business can continue as a going concern. Provided the business can continue, it will then be up to the new owners, once the estate administration is over, as to how the business is run.”
