Business continuity starts with your Will and Power of Attorney: what business owners should know

Alice Clewes, Partner, Private Client Team

With significant changes to a valuable relief from Inheritance Tax, Business Property Relief, coming in next year, now is the time for business owners to take action. For many years this Relief has enabled businesses to pass on death without the burden of Inheritance Tax. From April 2026 however the advantages are likely to be significantly reduced - business owners should be considering how they will be impacted, what steps can be taken to protect their businesses and maximise the Relief available to them.

There is potential planning that can be carried out within Wills and also possible lifetime giving that can be considered. The options may include the use of trusts or putting in place insurance, and it may extend to conversations with the next generation to take into account their wishes and expectations in relation to a family business. There may be wider discussions requiring commitment to put in place Wills by all family members or nuptial agreements if lifetime giving is being contemplated.

The planning options will depend on personal circumstances of the business owners and their families, as well as the nature and extent of the particular business. Getting the right professional advice will be very important, with trusted advisers in the different areas of expertise such as law, accountancy, finance and tax working collaboratively to provide recommendations tailored to the particular business owner.

The changes to Business Property Relief, although not welcome in themselves, may also prompt the very necessary detailed review and discussions that should always accompany putting in place Wills for business owners.

Whether you are a sole trader, a director, partner, or a shareholder will influence what the Will should include and before getting to the drafting stage there are many questions to consider.

As a business owner, it is important to consider:

• Who will continue to run the business?
• Whether to pass the business, or your share of it, to a particular family member. Will they continue to run the business, or do you simply want them to have the cash value? Are family members equipped or even interested in taking over the running of your business?
• Should protections be put in place to preserve the business, for example against relationship or financial difficulties?
• Will co-shareholders or business partners want to continue to run the business? Will they have funds to buy out your share or will they have to run it with your family?
• Although the answers to these questions may take some thought, they will then enable tailored advice to be given regarding the drafting of a Will and also any associated arrangements which will ensure the protection of the business and succession wishes.

A Will should also not stand in isolation, it will also be important to review business related documents such as the Articles of Association of a company, Partnership and Shareholder Agreements, insurance arrangements. hese need to work alongside and not conflict with the provisions of a Will and may need to be reviewed and updated as part of the discussions, especially if the business grows or changes, new partners and investors join or family and financial circumstances shift.

Business owners should also consider what would happen to the operation of their business if they were not able to make decisions personally; this could be as extreme as a loss of mental capacity or it could be that time is needed away from the business for personal reasons such as illness or bereavement of loved ones. Are arrangements in place in these circumstances to enable the business to continue? Powers of Attorney should be considered as this will enable the correct people to be in place to take on decision making if required. Again, business owners need to consider questions such as who would they wish to act in relation to their business interests and would this be the same people who would act in relation to their personal affairs? It may be that they need separate Business and Personal Powers of Attorney.

How can Hay & Kilner help?
Lifetime planning to include Wills and Powers of Attorney is a vital part of securing the future of a business, but it can be a complex process that benefits from expert input. With one of the leading and largest Private Client teams in the North East, we have a team of specialists with a wealth of knowledge who can offer guidance, support and practical advice as you structure your affairs to protect your assets and plan confidently for your family’s future.

At Hay & Kilner, our Private Client team collaborates closely with colleagues across the firm to deliver comprehensive legal support tailored specifically for business owners. As a full-service law firm, we ensure that every aspect of estate planning is aligned with the unique structure and goals of your business and work in partnership with clients' existing trusted advisers to create plans that not only reflect their personal and professional objectives, but also safeguard the long-term legacy of their business.

Contact Alice Clewes for further information.