Any business owner should consider how their business would be run and the knock-on effects for their business were they unable or unavailable to make decisions.
Putting a Will & LPAs in place for your business ensures that you have a continuity plan and say over who would assume control of the business (either temporarily or permanently), leaving your business exposed to less risk.
A business LPA can be applied if a business owner:
is overseas - either on holiday or for business
has had an accident or experiences an incapacitating medical condition that means they are no longer capable of acting
Who is a business LPA suitable for?
a sole trader, permitting they are not legally considered a separate entity to their business
a person who is self-employed, as they are not a separate legal entity to their business
a director of a company, if a director’s incapacitation is not covered by the Articles of Association or Memorandum of Association
a partner within a partnership, if a partner’s incapacitation is not covered by the articles of association or memorandum of association
What happens to your business after your passing away?
As a sole trader
Any assets used for business purposes are owned by you so sole trader businesses are straight-forward when it comes to writing a Will.
You can opt to leave this type of business as part of your residuary estate and can then be shared between your beneficiaries in any way you choose. This may be right for you if you have a succession plan and want your business to continue trading after you pass away.
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If you own a limited company
All limited companies in the UK have both a memorandum and articles of association which specify the purpose of the company and how it should be run. The articles of association may also dictate what should happen to your share of the business when you pass away, so it’s important to read these documents when you start writing a Will.
If the articles of association include details of what happens to the business when you pass away, this will usually overrule any wishes left in your Will. If the articles of association don’t outline what should happen to your assets when you pass away, then you may wish to contact us to chat further about leaving your business within your Will.
If you're in a partnership
A formal partnership agreement is typically established as part of any partnership forming. This agreement will outline what happens to your share of the business after death. The terms of this agreement will override any wishes stated in your Will, so ensure you take the time to read the initial agreement.
If you didn’t create a partnership agreement and there isn’t one in place at the date of your passing away, the partnership can be forced to cease trading when a partner dies.
If you're in a limited liability partnership
All limited liability partnerships should have an LLP agreement or LLP members’ agreement, which is designed to ensure the LLP can carry on if one of its members passes away. If you’re a member of an LLP, it's important to familiarise yourself with the terms of your agreement before you start writing a Will.