The start of a new year often brings with it resolutions for self-improvement, a desire to make life changes and, for some individuals, the impetus to take the first steps into a new business venture, or, for more seasoned entrepreneurs, the motivation to take their business to the next level.
It is easy to get caught up in the hard work of establishing a new business and to neglect your personal affairs. However, prudent management of your personal affairs now could make all the difference to your business in the future should you become seriously ill or in the event of your death. By making a Will and putting a Power of Attorney in place you can plan ahead.
Make a Will
Advice should be taken from a specialist Private Client Solicitor when making a Will. As part of this process a full review of your personal and business assets would be undertaken along with an assessment of your inheritance tax position. In some cases it can be helpful for the Solicitor to consult with the business’ Accountant to clarify how the business assets are held and dealt with in the accounts.
It is important to ensure that your intentions are made clear and that the correct type of Will has been drafted for you, otherwise, your family and your business could encounter unnecessary difficulties after your death. Consideration requires to be given to the documentation under which the business has been established, for example Articles of Association or a Partnership Agreement, as these may stipulate who will receive the business assets after your death. The manner in which you hold the business assets needs to be taken into consideration to ensure that appropriate tax planning is undertaken so that your assets are passed on in the most tax efficient manner.
Plans should also be put in place to ensure that your business can continue to operate until the administration of your estate has been completed, as this could take some time.
Power of Attorney
Whilst planning for the future of your business after your death is important, equally important is ensuring that your business can continue to operate should you become unable to work due to ill health or mental incapacity. The preparation of a Power of Attorney will deal with this.
By putting a Power of Attorney in place you will be clearly stating who you wish to act as your Attorney should you require assistance with the management of your affairs.
By consulting a Solicitor, the Financial Powers contained within the Power of Attorney document can be tailored to include provisions which will specifically relate to the running of your business and ensure that the most appropriate person to carry forward your business is appointed to act as your ‘business attorney’. Having already invested your hard work, time and money into your business, by having an appropriately drafted Power of Attorney in place, you can ensure that the business can continue to operate.
2020 may be the year you realise your goals as an entrepreneur, but don’t overlook the importance of ensuring your personal affairs are in order. It’s not too late to add one more resolution to the list.
Lisa Hainey is an Associate in our Private Client Department. If you would like more information about preparing a Will or Powers of Attorney please contact Lisa on 01592 268608, by email firstname.lastname@example.org or alternatively contact a member of the Private Client team.