Understanding what will happen to your business when you die is essential for you and the people who depend on it. Your business may be one of your most valuable assets.
What happens to my business if I die?
• Sole Trader – Your business is not separate from you as an individual. Any assets used in your business (such as equipment) will go to the beneficiaries of your will or surviving relatives under the rules of intestacy if you do not have a will. You can make a gift of specific assets used in your business if you want a named beneficiary to inherit these.
• Partnership – Unless there is a formal partnership agreement in place, your partnership will automatically dissolve on death. Having a partnership agreement enables clarity over what you and your business partner would like to happen to your shares on death and how this should be valued.
• Limited company – Your business has a legal identity, so it will continue to exist on your death. The articles of association may specify what will happen to the shares of your business. If the articles do not restrict this, you can leave the shares directly to beneficiaries of your will or via a trust. A similar situation applies to Limited Liability Partnerships.