NEWS EXTRA
WHERE THERE’S NO WILL, THERE IS STILL A WAY
Adam Bernstein looks at the touchy subject of what can happen to a business if the worst happens and proper preparations haven’t been made.
W
e enter the world with nothing and depart as we were born, leaving our earthly possessions behind. This harsh circle of
life becomes grimmer for those left behind, especially where there is no Will to determine how a deceased’s assets are distributed. Now throw a business into the mix and a sad death becomes unpalatable and expensive to resolve. The facts prove that more suffer than they need to. According to a Macmillan Cancer Support survey, published in January 2018, nearly two thirds of the UK population has no Will, and of the over-55s, 42 percent are without . Further, the results indicate that another 1.5m people have invalided their Will by marrying.
The problem is, as Emily Deane TEP, technical counsel at STEP, a professional association for practitioners specialising in family inheritance and succession planning, knows, “many assume their possessions will simply pass automatically to their partner or children, or believe their assets are too insignificant to need a formal arrangement. But if you die without making a will, the intestacy rules will be applied, and this may not be what you want.”
Providing comfort
Malky Chaloner, a senior solicitor specialising in Wills, tax and trusts at Moore Blatch, believes that a Will is an “opportunity to choose who inherits your estate upon death, and also to put in place estate planning measures to mitigate tax liabilities.” She says that a failure to have a Will can lead to unintended consequences in terms of who inherits, as well as creating relationship- destroying disputes between those left behind. The intestacy rules changed in October 2014, when the Inheritance and Trustees Powers Act came into force.
Angharad Lynn, a solicitor in the private client team at VWV, says that under these rules, “if an individual dies leaving a spouse and children, the spouse will take the statutory legacy (currently £250,000) and the rest of the estate will be divided equally
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between the spouse and the children.” Beyond that, as Deane explains, assets are distributed (in order) to children/grandchildren, then to parents, siblings, grandparents and finally uncles and aunts. “If you have none of the surviving relatives on the list, then your estate will go to the Crown, a situation known as ‘bono vacantia’.”
Even worse still, the rules take no account of unmarried relationships and Chaloner knows that some “may have to issue legal proceedings and fight those ‘automatically entitled’ under the intestacy provisions.” But Wills do also have other benefits says Chaloner. Without a Will an individual is unable to leave legacies.
Furthermore, “without the appropriate tax-planning that should accompany Will preparation, sensible and entirely legal arrangements that can be put in place to reduce potential tax liabilities will not exist.” Another aspect to consider is choosing executors to administer an estate after death.
For many, it is common to appoint a spouse or children, but Lynn says “it is also worth appointing a professional who can ensure that your business assets are dealt with as you wish.” She says that the advantage of choosing a trustee company is that it will provide continuity for the appointment of an executors, enabling partners from the firm to act. To this Deane adds that “if you have young children it would be sensible to appoint two executors to become the trustees of the children if they are under eighteen years old when you die.”
Owners can seek protection The effects of not having a Will are potentially even more damaging to business owners. From Chaloner’s viewpoint, a Will gives the power to decide who inherits shares in a company, and, potentially – depending on shareholding - who will ultimately run the company: “Without a Will, shares will be distributed in accordance with the intestacy rules, which may mean
www.buildersmerchantsjournal.net January 2020
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