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Are you a company director who has invested a significant amount of time and money into building a business of real value? If your company has been profitable and supports both your family and lifestyle, your efforts have certainly been worthwhile. Let’s not forget — your business is also likely the main source of income for many of your employees.
While you’re focused on growing your business, there’s one important task you shouldn’t put off:
Writing your will.
You might be in good health, full of energy, and committed to taking your business to even greater heights. But life doesn’t come with any guarantees. While managing day-to-day operations may be your top priority now, it’s also important to think ahead — and plan for a future where you may not be around.
It’s not the easiest topic to discuss, but delaying your will can create serious problems if something unexpected happens. Without a will, your loved ones and business associates may face unnecessary confusion, disputes, and legal complications.
Creating a will ensures that your business, assets, and estate are passed on to the right people. It’s a smart and responsible decision — one that also helps reduce uncertainty about what will happen to your business in the future.
Why Should I Create a Will as a Director?
Creating your will should be high on your to-do list as a company director. These are the reasons why:
- Without a will, your estate is handled under the UK’s Rules of Intestacy.
Remember, in your absence, your business assets need to be distributed, and without a will, all your assets — including shares and estate — are handled as per fixed legal guidelines. These may not reflect your personal wishes.
In case you are the only shareholder and director, the after-effects of your passing can leave a more serious impact. The company will have no leadership until probate is granted and someone is legally appointed to manage the business. Imagine the kind of setback it can be — with no one able to make decisions, continue operations, or access company funds.
In the case of multiple directors, there could be endless confusion and, consequently, delays in decisions and other critical matters. This can lead to disruption in business continuity. It can also cause unnecessary stress for your loved ones. Worst of all, the business may even have to be shut down.
- Want Business Continuity? A Will is a Necessity
When a director, sole or otherwise, passes away, the business remains behind and its operations need to continue running to avoid disruptions. However, in the absence of a will, there are no clear legal instructions. This can easily bring your business operations to a halt—something you built with care and passion.
Along with all other strategic decisions related to your business, creating your will is one of the most crucial. With a will, you can choose your legal inheritors of assets, business shares, etc. The will also permits you to appoint executors, ensuring that neither your loved ones nor your business is left in a mess later on.
If yours is a family business, a will can help prevent potential conflicts between surviving family members and business partners. In the case of larger businesses, shareholders have more clarity and, therefore, more confidence in their investment.
Point to remember – when the will is legally drafted and covers all relevant matters, the burden of inheritance tax on your estate is reduced, making it easier for your inheritors.
- Safeguarding Your Loved Ones
As a director, you build a business not just for yourself, but for your family, children, partner, and others. Your will helps keep your loved ones financially protected and reduces stress for them long after your death.
In the absence of a will, there could be disputes between your loved ones over inheritance matters. Business accounts may no longer be accessible, and the future of the business could begin to look uncertain. Additionally, your loved ones may need to spend a significant amount on legal fees to get professional help.
When you have a well-defined will, you leave behind clear instructions about how your estate, business assets, and operations will be divided amongst your inheritors—and who gets what. There will be specific roles and responsibilities assigned to trustees and executors. The will can also contain provisions for vulnerable family members. In the case of minors, you can name guardians to care for them in your absence.
The Process of Writing Your Will
This is not a process that takes too much time or money—especially if the state of affairs of your business is fairly straightforward. There are service providers who can help you write your will, offering their services over the phone or online. These options are available at different price points, and the process can be completed without any hassle.
However, wills for company directors can be a bit more complex. You’ll need to factor in different elements, such as dividends, shareholdings, business assets, and more. In such cases, standard service providers may not be suitable. It’s best to speak with a legal professional who specialises in estate planning to make sure that all relevant considerations are properly addressed.
Points to focus on before drawing up your will:
- Do you want your business to continue operating, or do you want it sold or closed?
- Who will have the ownership rights to your business, shares, assets, estates, etc.?
- Is there a dependent or minor for whom you want to create a trust?
- Consider the tax implications carefully.
The ideal approach is to seek help from a legal counsel or solicitor who has expertise in company law and personal estate planning.
What to Do Next?
As a business director, it is crucial to get in touch with an accountant or solicitor who specialises in estate planning to get the right advice. If your estate matters are simple, you may consider using online or phone-based will writing services.
By now, you’ve probably realised that while writing a will isn’t legally mandatory, it is absolutely essential to prevent confusion after you’re death—especially when it comes to business-related matters.
If you have any further questions, you can speak with a chartered accountant at Cangaf.
Further reading and official guidance
More guides and tools from our team:
- Inheritance Tax and estate planning
- Inheritance tax planning for families
- Inheritance tax and pension reform
- Business Asset Disposal Relief
Official guidance from HMRC and GOV.UK:
