The importance of having a Will for business owners.
With the current global threat of Coronavirus, it is more important than ever for business owners to consider creating or updating their Will in order to protect their loved ones when they are gone. This is still possible, even with the current social distancing measures in place.
The importance of having a will cannot be overstated. Not only does it provide certainty for family members but they are also vital tax planning tools.
What happens if you pass away without a Will?
If you die without a valid Will, you will be dying intestate and your estate, including your business, will pass to those entitled under the intestacy rules. Under these rules, your estate could pass to unintended beneficiaries, and leave your loved ones in a very difficult situation at an already emotionally challenging time.
In addition to the above, passing away intestate will have major tax repercussions.
Business owners & business assets
In particular, you may wish to consider which business assets, if any, form part of your estate and whether they would be eligible for business property relief (BPR).
The main aim of BPR is to reduce the risk of inheritance tax charges resulting in the breakup of a viable business in a succession situation e.g., where the owner of a family business passes control on to his children or grandchildren.
Where the conditions for the relief are met, BPR reduces the value of gifts of relevant business property for the purposes of calculating any IHT due. The reduction in value will be either 100% or 50% depending on the type of asset and who owns it.
With proper estate planning, you could pass on such an asset in your Will to a chargeable beneficiary to ensure that the relief is not lost on a beneficiary who is already exempt, such as a spouse.
Senior business professionals
Even if you do not have business assets to consider, a Will can still ensure that your estate remains tax efficient. Without a Will, your estate will pass in accordance with the intestacy rules, which can mean that an Inheritance Tax liability will become due. A Will would help to avoid this, whilst ensuring that your estate passes to your loved ones.
If you have an existing Will, it is important that this is reviewed every five years to ensure that it reflects your wishes, and is compatible with any legislation changes. With the introduction of the Residential Nil Rate Band in April 2017, some Wills may be preventing the additional exemption from being claimed by your Executors.
If you would further information on the benefits of creating or updating a Will, please contact Karen Woodison on 01494 478613 or at email@example.com