To ensure that your business continues to thrive once you pass away, Prestige Tax and Trust Services explains how to choose a beneficiary for your business.
It is Essential That You Choose the Right Beneficiary
If you are a sole trader, the question of how to leave a business in a will is relatively simple; you outline what you wish to happen to it in your will. If you are a member of a partnership, the question becomes more complicated, as you may be bound by a partnership agreement.
In most cases, however, you will need to choose a beneficiary for your business in your will. This is the person who will inherit and run your company when you die. It is essential that you choose the right beneficiary.
Why Does it Matter That You Choose the Right Beneficiary For Your Business?
Normally, the question of beneficiaries is a fairly simple one. Legally, you are allowed to choose anyone you want. That is why when making a will for their personal assets, most people choose the people closest to them; a spouse, child etc. These are the people they most care about, so these are the people that they want to protect financially.
However when it comes to a business, there are different issues at play. You really need to ask yourself’ who will run and build the business? In other words, who has the right skillset to ensure that the company remains profitable?
Consider a Beneficiary’s Experience and Personality
That’s why the main thing you need to consider in choosing a beneficiary for your business is what their personal circumstances are. One potential beneficiary could have experience, where the other doesn’t. That person would make a better beneficiary, since they can apply that experience to the task at hand.
Let’s look at an example. You have three children. One has an English Literature degree. Another has a degree in Chemistry. The last, however, has a degree in a business related discipline. Reason dictates that you make the third child the beneficiary of the business, as they have the knowledge necessary to ensure it continues to benefit the entire family. Or least leave them a controlling share.
Although personality traits of course feature into it as well. Say the third child has a history of acting unethically. That suggests that they would not use their authority to act in the best interest of the company, or the family. Then, the decision becomes harder to make.
The Prestige Tax and Trust Service’s Business Protection Service
Whoever you end up choosing as a beneficiary for your business, once you have picked them out, you are going to need legal expertise to draw up the will. Prestige Tax and Trust Services, with its specialist business protection service, is here to help.