Many business owners understand the importance of safeguarding their companies during their lifetime—but what happens to those assets when they’re no longer around?
For couples with “simple” Wills—where the entire estate passes to the surviving partner and then to children or other beneficiaries—there can be unintended consequences, especially when a business is involved.
At Altor Wealth, we believe estate planning should not only reflect your wishes but also protect the legacy you’ve worked hard to build. Here are some key considerations:
The Ripple Effect of a Simple Will
When a business owner passes away, their shares or stake in the company might automatically transfer to a spouse or partner. While this may seem straightforward, it raises important questions:
- What happens to the company’s day-to-day operations?
- Are your business partners prepared for a new stakeholder?
- Will your family face unexpected tax burdens or financial risks?
The Inheritance Tax Trap
Some business assets qualify for 100% Business Property Relief (BPR), potentially making them exempt from Inheritance Tax (IHT). However, this protection isn’t permanent. If the assets are sold or if BPR rules change between the first and second death, the tax-free status can vanish—potentially subjecting your heirs to a 40% tax on the proceeds.
The Case for a Business Property Trust
A more strategic option is to gift your business assets into a Business Property Trust through your Will. This approach offers a host of advantages:
- The business can continue to trade uninterrupted.
- Your family can still benefit financially through dividends or income.
- If the business is sold, the proceeds remain outside the taxable estate of the surviving spouse.
- The assets are shielded if your partner remarries or enters a new relationship.
- They’re also protected from being counted towards long-term care costs.
A Smarter Legacy
Including a Business Property Trust in your estate plan doesn’t just protect assets—it protects futures. It ensures your business can thrive, your wishes are respected, and your loved ones aren’t burdened by preventable financial challenges.
If you’re a business owner thinking about the future, we encourage you to speak with your financial adviser and explore whether a Business Property Trust could be the right fit for your estate plan. If they don’t have the knowledge, then speak to us about your options.
Our advisers are building complete estate plans for clients, from our offices in Hook, Hampshire and across the UK. We also prepare specialist Wills and LPAs for our Businss Owner clients through a legal partner.