Would my partner own my business in the event of my death? - MLP Law

Would my partner own my business in the event of my death?

  • Wills, Trusts & Probate
  • 7th May 2024

When a business owner dies, their business assets form part of their estate and are distributed in accordance with the relevant provisions of their Will or the rules of Intestacy.   Your partner or spouse will not automatically inherit your business assets and it is important to consider each element to ensure your wishes are met.  […]

By Jane Hunter

MLP Law

When a business owner dies, their business assets form part of their estate and are distributed in accordance with the relevant provisions of their Will or the rules of Intestacy.  

Your partner or spouse will not automatically inherit your business assets and it is important to consider each element to ensure your wishes are met.  There are a number of misconceptions surrounding estate planning, which often lead to problems on death.  A common misconception is that your assets will automatically pass to your spouse or partner. To avoid uncertainty, it is recommended that you seek professional guidance to ensure your wishes are complied with. 

 

What happens if there is no Will? 

When a business owner dies leaving no Will, they are deemed to have died intestate. If this occurs, your estate will be divided in accordance with the intestacy rules as contained in the Administration of Estate Act 1925. 

As well as complicating issues and making the process of administration lengthy, dying without a Will in place can cause great problems. Unmarried couples have no automatic entitlement to any of the deceased partner’s estate.  Furthermore, if the deceased left a spouse or civil partner and surviving children the estate will be split in accordance with the Intestacy rules. The division of the estate will include the business assets and may cause complications for the continuance of the business. 

 

What happens if there is a Will? 

If the deceased prepared a Will stipulating their wishes, these instructions will be followed together with any agreement prepared by the business owners, such as shareholder agreements, partnership agreements, and articles of association.  

It is common for business agreements to include provisions on what will happen to the owners interest in the business following death. There may be a provision in the agreement where the surviving partners/shareholders have a right to buy the deceased partners’ shares from the estate of the deceased.  As such, the partners/shareholders can assert this right, irrespective of the terms of the Will, which may leave the interest to a spouse or partner. If the partners/shareholders asserted this right, the surviving spouse or partner would no longer own the shares in the business and would receive the cash value for the purchase of the shares. 

A partnership agreement or shareholder agreement is a contractual agreement between the business owners, which is enforceable against the estate of the deceased.  

 

How can mlplaw help? 

It is important to remember the structure of the business may affect the way the asset it dealt with on death. Adequate succession planning looking at business assets is vitally important to ensure your wishes are met and any business agreements are reviewed in the planning process. As such, it is important to seek professional guidance and legal advice when doing so. Our team of experts can provide you with bespoke advice, tailored specifically to your needs. 

 

Our team can advise you on: 

  • What happens on death 
  • Preparation of Business Wills 
  • Bespoke business trusts 
  • Cross Option Agreements 
  • Review of the companies articles 
  • Transferring the ownership of the business 
  • Winding up a business 
  • Sale of a business 

About the expert

Jane Hunter

Partner and Head of Private Client

Jane is a Private client lawyer who is CTAPS qualified, and a member of the Solicitors for the Elderly. Jane acts for a wide variety of clients including business owners, high net worth individuals and agricultural clients.

Jane is experienced in advising on Wills, Powers of Attorney, Tax Planning, Administration of Estates, Court of Protection matters, and Asset Protection within families and businesses and contested Probate estates.

Jane lives locally in Lymm with her 18-year-old son and in her spare time, she enjoys spending time with her family and friends and renovating her house and garden.

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