1. If you own a business, you're never too young to make a will.
If Stuart Baggs died intestate, as an unmarried man with no children, his business will automatically be inherited by his parents. This may not necessarily be what he would have wanted. Perhaps he had a life partner he wanted to provide for. Perhaps he would have preferred to bequeath the business to his colleagues. He may even have wanted to endow his favourite charity.
The key to making sure the fruits of your life’s work go to the people you want to provide for, is to get that will written.
2. Appoint the right executors
In the absence of a will, Baggs’ parents will not only inherit his business, but will also be burdened with the role of Administrators of his estate, meaning that the responsibility for the business, either managing it, winding it up or selling it, falls to them.
Are they equipped for this onerous task? Particularly right now when grieving the loss of their son?
Writing your will enables you to appoint executors, which means you can choose the people you trust the most to take care of your business. You can even appoint separate business executors, such as your co-director or accountant, to take care of your business interests, with other executors to take care of your personal affairs.
3. Make a Lasting Power of Attorney
Your sudden death isn’t the worst calamity that could befall your business. Arguably, an ever greater challenge would be posed if you suffered a head injury or catastrophic illness, losing the ability to make decisions for yourself.
This would place your business in limbo for six to nine months while the Court of Protection decided who to appoint as your “deputy”, to manage the business on your behalf. That much downtime would probably be fatal to your business, leaving you with no financial provision to fall back on.
By making a Lasting Power of Attorney for Property and Financial Affairs, you can appoint the people you trust to step in if needed, and have them ready as your safety net. Again, you might want to appoint a professional such as your accountant, or alternatively you might prefer someone who knows your business inside out, such as your partner or co-director.
4. Make a Partnership/Shareholders’ Agreement
If you’re not a sole trader, it’s helpful if you and your partners or co-directors consider all eventualities as a team.
Having a partnership agreement or a shareholders agreement in place is a great decision because it sets the ground rules for your business relationship. In this context it's also a great opportunity to define what would happen in the event of the sudden death or catastrophic injury of one of you.
For example, an agreement can give your colleagues the option to buy out your share of the business for a fair market price. This can be backed up with a suitable insurance policy that provides the purchase price for your share should disaster strike.
Don’t do business without a safety net
If you’re devoting your career to building a business, don't risk your life’s work going up in smoke if something happens to you. To find out how easy it is to implement the Four Pillars of Wisdom, do get in touch, either by filling in the contact form below, or by giving us a ring on 0151 363 3977.