When running a business, it is not unreasonable to find that a large proportion (if not all) of your time is taken in making your business successful. From rapidly growing start-ups to established family run businesses, long working days pass into months, which then roll into years in the pursuit of making the business a success. So it is no surprise that planning for those ‘worst case scenarios’ is not at the top of the ‘to do’ list.
However, having worked so hard to create and establish a successful business, it is also important to take the time to consider what would happen to all of that hard work and success if a personal catastrophe arose, such as loss of mental capacity or death.
According to Legal and General’s recent ‘State of the Nation’s SMEs’ report, of 800 SME owners surveyed, over half did not include any provisions in their Wills for the future of their business, or have any specific arrangements in place for dealing with their shareholdings or business assets (such as Shareholder Agreements).
Given the busy nature of running an SME, many had not reviewed the business’ governing documents such as company Articles of Association or their Partnership Agreement since the business began.
Should the worst happen, and a business owner was to die without adequate planning in place, this could cause major problems for the future of the business. For example, in a company uncertainty would arise in relation to whom the deceased’s shareholding would pass. Could the company buy back the shares? If, so, how would this be financed and ultimately would it enable the business to continue to existence as a going concern?
Aside from the difficulties this would cause from a business perspective, it can also result in family members and loved ones being left in a financially vulnerable position, with the wealth accumulated within a successful business being inaccessible, eroded or lost after so many years of hard work.
At Hay & Kilner, our specialist solicitors in our Private Client and Commercial teams work closely with business owners, directors and shareholders to provide advice and planning through Wills, Shareholder and Cross Option Agreements and Lasting Powers of Attorneys to ensure that should death or incapacity occur, the business can continue, and the families and loved ones of those involved in the business will be provided for.
For further information or advice, please contact Alice Clewes, Partner in our Private Client team.
Call: 0191 232 8345