What happens to your business without you?

Lots of business owners start their own entrepreneurial efforts for a variety of different reasons. ...

Lots of business owners start their own entrepreneurial efforts for a variety of different reasons. This
may range from wanting to create a better work/life balance to creating a legacy for their loved
ones.

Since the pandemic I have met many ‘new’ business owners that have started their own business
due to being made redundant. This could be a side hustle to build an extra income or a career.
When talking to people about their Wills, how many people have thought about what would happen
to their business on death? Of course, this depends on what you do and more importantly what you
want to happen to it on your demise. I come across some companies that work without the owner;
in which case the business may continue and potentially produce an income for loved ones left
behind. Some businesses may of course not work without the owner as the owner IS the business.
If you are the sole business owner and want the business to continue if you were to die or become ill
then here are some things to consider:

 Key person insurance. This is designed to pay out a lump sum of money to the business to
cover a death or illness, allowing the business to continue. This money could be used to
either find a replacement for the key person or just to cover costs during a period of illness.
 Life insurance. This could ensure that any debt is covered and can be cleared in the event of
death.
 If you there are shareholders in your business then you should have a shareholder
agreement in place. This not only protects your loved ones and family on your death but
also protects the business during lifetime. It would typically dictate what happens to the
shares of the company on the death of a shareholder, or if a shareholder wants to sell their
shares during lifetime, what is their entitlement.
 In addition, you can also look at shareholder insurance. Designed to pay out a lump to the
business to buy out the deceased family, a Shareholder Protection plan would usually be
taken out in conjunction with a cross option agreement to ensure all parties are protected.

For most people their accountant will play an integral role in the business’s financial situation.
Therefore, I always advise people to have information like who their accountant is ready for their
executors to save time and hassle. When writing a Will a business owner may appoint another
shareholder or their accountant as a specific business executor. This means their friends or family
members may be appointed to look after their personal affairs and someone involved within the
business may be appointed to look after business affairs.

We hope you find this helpful, please get in touch if you are a business owner and require any
assistance setting any of these things up.