Have you built a successful business with a partner? Do you want to protect your interests if that partner passes away? If so read on, as Prestige Tax and Trust Services explains what happens to a business if one partner dies.
The benefits of a business partnership
Data quoted by the Federation of Small Business shows that at the start of 2014, there were 5.2 million businesses in the UK. 460,000 – or 9% – were business partnerships.
There are many advantages to a business partnership. Working in tandem with another professional in your field allows you to draw on their experience, talent and knowledge base to build your company into a profitable venture. However there is one drawback to a business partnership; you don’t have sole control of your firm.
What happens to your business interests if your partner dies?
This can be a problem if your partner dies. What happens to your partner’s shares in the company if they die? Prestige answered this question in our Important Information for Business Owners Guide.
We asked what happens to your business interests if your partner dies? The answer? “Without a written Partnership Agreement to deal with the death of a Partner, the Law says that the Partnership is ended. A properly worded Will should reflect the provisions of a Partnership Agreement. Your Business Partners may not be happy to accept your beneficiary as a Partner.”
Business partnership agreements and wills
This means that in the case of a general partnership, the most common form in the UK, default regulations dictate that the partnership dissolves if one or more of the owners passes away. You need to write a business agreement if you want to make sure the partnership continues in one form or another. This document allows the parties involved to set up the structure and expectations of the company and have this legally recognised.
The contents of the business agreement need to be reflected in the Will. A Will is a legal document which determines what happens to a person’s money, assets property etc. once they die. If you learn how to write a will you ensure that the directions for how your firm should go forward in the event of one partner’s death are legally respected. Collaborate with your partner when choosing a beneficiary for your shares in the company, so that you can be both be sure you’d be happy to work with whoever would take the others place if they were to pass away.
Business Protection Service
Writing a business partnership agreement and a business-orientated will is complex. It’s best left to the professions. Prestige Tax and Trust Services has launched a business protection service that you and your partner can use to write your business agreement and will.