Is your business ready for the unexpected?

Lisa Greenwood Potter, Accountant, EssexPosted by Lisa Greenwood:

Personal circumstances recently reiterated the need for all of us to think about and prepare for the worse. The worse relates to two main events firstly death (one of life’s certainties) and secondly mental or physical incapacity. Some business owners are likely to have considered these events from a personal perspective but I see a large majority that have not considered these events from a business perspective. I am also surprised how many individuals still also do not have the basics of a will in place and incorrectly assume that their estate just passes to their spouse. 

In simple terms it is important that you have an up to date will and I strongly recommend having lasting power of attorneys (LPA’s) for both health and welfare and financial matters in place. It is strongly recommended that these are prepared by a solicitor although they can be prepared without. LPA’s are available to be prepared via the HMRC website.  However these documents in isolation may not be enough.  

The documents are very likely to allocate shares or the business to surviving spouses or other individuals but have you actually dealt with the practicalities of running  the business, not only in death but for periods of incapacity. In fact the latter is more important and this is a position when hopefully you will return to the business and its important that there is one to go back to. For this situation it is crucial that there are documents in place that allow the business to function in your absence.  

Questions that you need to ask yourself:

  1. Is my will up to date and include provisions relating to the business?
  2. Do I have LPA’s in place to deal with financial matters due to incapacity?
  3. Do I have adequate provisions in place to ensure that the business continues trading in the event of my death or incapacity?
  4. Do I have financial provisions in place to deal with the business in the event of my death or incapacity?
  5. Do I know what happens to my share in the business in the event of death or incapacity, do my dependents also know?
  6. Would my dependents/beneficiaries want or be capable of running the business in my absence?
  7. Would my dependents/beneficiaries financially be able to look after themselves in my absence?

If you would like any advice on what provisions you should be making and how you can protect your business please contact us.

August 2018.

Disclaimer

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

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