How to Leave Your Business in Your Will

According to the Institute for Family Business, there are 4.8 million family businesses in the UK, making up 85% of all businesses and generating over 25% of the country’s GDP.

Tax receipts from family businesses generate more than the entire budget for the NHS! They are vital for the British economy and for families. This makes it even more vital to ensure your business is taken care of when you are no longer around.

Whether you are a 2nd or 3rd generation family business owner or spent your life starting your business from scratch, it is important to get your affairs in order ahead of time.

There are high risks to your business with not adequately planning to pass on your business to your loved ones. Alexis Thomas, experienced Chartered Legal Executive at CJCH Solicitors explores how you can leave your business in your Will. It is never too early or too late to start thinking about your future and the future of those left behind when you are no longer around.

What, if any, impact would your business or shares have if you died without including them in your will?

If your business or shares are not included in your Will, they could end up being sold, broken up or pass as part of the residue of your estate. They may end up with someone who is not able to run the business because of a lack of knowledge and experience. A minor will experience difficulties continuing the business if shares are left to them.

How can a solicitor help you leave a business or shares to someone in your will?

A Solicitor can ensure you direct who the business or shares will end up with. Furthermore, they advise you on who is best to control your business. They can decide the best structure for the Will, such as leaving the business or shares in a discretionary trust. This will give your family the benefit without direct involvement in the business.

Solicitors advise on other options for your business, such as shareholder agreements and life assurance policies. These options protect yours and your business partner’s interests.

Getting proper advice ensures you can continue to control what happens to your business assets and shares once you have passed away.

Do other shareholders have to accept a new shareholder if you leave shares in your will?

The Testator cannot force other shareholders to accept a new shareholder if leaving shares in their Will. Any share transfers in a Will will be governed by shareholder agreements or partnership agreements etc. In this scenario, the likely option is to sell the shares and gift the value, rather than the shares themselves.

What disputes can arise when leaving a business or shares to someone in your will?

The business may face disputes between shareholders if the business position is not effectively considered. If the shareholders cannot reach an agreement, neither shareholder will have control of the company.

Generally, problems will arise in the event the business is left to a minor with no partnership agreement in place. If the decision-making process becomes paralysed, it could end the business, which has serious tax consequences.

What inheritance tax issues should someone leaving a business in their will be aware of?

If someone owns a business, creating their Will in the most tax-efficient way will help minimise Inheritance Tax (IHT). Passing a business in their Will can lead to a large IHT bill.

As a result, the Executors may have to sell the business to pay the IHT bill. Qualification for Business Property Relief (BPR) will allow a person to pass on a part of the business free of tax. However, not all businesses qualify for BPR.

Therefore, the solicitor needs to know everything about the business to advise if BPR applies. Solicitors can advise clients to leave assets that qualify for BPR to other family members such as children so that they are not passed to spouses who are eligible for a different IHT relief.

How we can help:

It is never too early or too late to start thinking about your future, and the future of those left behind when you are no longer around. The team at CJCH has extensive experience in Wills & Probate; Tax & Estate Planning. Get in touch with a member of our team today:

Telephone: 0333 231 6405

Email: privateclients@cjch.co.uk

Leaving a Gift to a Charity in Your Will

 

Today is International Charity Day. It is an opportunity to reflect and contribute to the incredible work that charities do around the world. Leaving a gift to a charity in your will is a great way to leave a legacy that benefits the most vulnerable in society. In addition, it benefits the beneficiaries of your will.

Alexis Thomas, a Chartered Legal Executive in CJCH’s Wills & Probate team, outlines the benefits of leaving a gift to a charity in your will, how to ensure the gift is not legally challenged and how to ensure the gift you leave is used in a way that aligns with your wishes.

Benefits of leaving a gift to a charity

Leaving a gift to a charity in your will is an excellent way of supporting a cause dear to you. Most charities will rely on donations to carry out their work so this is a great way of contributing to your charity’s long-term vitality. In addition, a gift in your will to a charity will not count towards the total value of the estate and the gift will pass tax-free. If the value of the gift is 10%, or more, of the total taxable estate, this gift will also reduce the amount of IHT payable from 40% to 36%.

The different types of gift you can leave

You can leave any type of gift to a charity. This ranges from a specific sum of money, items of personal value such as jewellery or even a % of your estate. You do not have to contact the charity in your lifetime, your executor will inform the charity that you have left them a gift in your will.

Specifying how the charity uses the gift

You can express in a wish how you expect the money to be used. However, the testator should discuss their wishes with the charity first, as the charity may refuse the gift if it cannot comply with the testator’s wishes. The wish is not binding, but charities will usually seek to carry out the specified request.

If your gift is challenged and how to avoid it

Firstly, always seek legal advice! This is so important. The courts place more weight on a moral obligation to a family, which outweighs any commitment to charities. If the gift is successfully challenged, then the gift could fail. Regular communication from the solicitor goes a long way in ensuring that this does not happen.

Donating outside of the UK

Donations outside of the UK are different than domestic donations. Exemptions from inheritance tax only apply to gifts to charities in the UK, EU member states (plus Norway, Lichtenstein, Iceland). Of course, this may change due to the uncertainty surrounding Brexit. Furthermore, donations outside of the UK do not benefit from Gift Aid as Gift Aid enables the charities to reclaim an extra 25% in tax on each donation made by a UK taxpayer.

How can a solicitor help you leave a gift to a charity in your will?

A solicitor ensures your Will is written correctly. This gives you the peace of mind the gift will succeed. The full details of the charity (charity number etc) are included so that the charity receives the gift. Incorrect information may cause the gift to fail.

How can we help:

It is never too late or too early to start thinking about your future. For more information on writing your will and leaving a gift to charity, speak to an experienced member of our team today.

Contact us:

Email: privateclients@cjch.co.uk

Telephone: 0333 231 6405