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Estate Planning for Business Owners – what should you consider?

Estate planning for business owners is a critical process that includes planning for the transfer of your assets and the management of your business in the event of your retirement, death or incapacity. Proper estate planning can help ensure that your business continues to operate smoothly, and your assets are distributed according to your wishes.

Here are some essential steps and considerations for business owners when it comes to estate planning:

1. Understand Your Assets and Liabilities

Begin by creating a comprehensive inventory of your assets – differentiate business assets and personal assets. These could include your business, property, investments, personal property, and more. Also, list your debts and liabilities.

2. Set Clear Goals

Determine your objectives for estate planning. What are your priorities when it comes to the future of your business and your beneficiaries? Common goals include ensuring the business's continuity, minimizing capital taxes, and providing for your loved ones.

3. Business Succession Planning

If you own a business, you need a solid succession plan in place. Succession planning involves identifying and preparing the next generation of business leaders to ensure a smooth transition of the business's ownership and management. For some, this may be a straightforward process and, for others, it can be a very emotional and stressful time, particularly if it is a business that you have put your life and soul into over the years.

Which option do you go for?

Gifting the business - There are many questions surrounding gifting the business, such as:

  • Who do you give shares to?
  • Do you treat all your children equally? Does fairly mean equally?
  • What about those children who are not involved in the business now?
  • Consideration of the wishes of non-family directors/shareholders (if any)
  • If you plan to make the gift by Will, check that your Articles of Association and Memorandum include the right authority. If you expect remaining shareholders to buy the shares from the beneficiaries, consider how this will be funded. Key person insurance may be necessary.

Planning for the sale of the business - Selling the business provides the opportunity for the current owner to realise the value and have the funds to retire. When is the best time to sell? Is your business ready to sell? Our "Selling a Business Guide" will give you more information.

We would advise that you:

  • Create a stable financial plan for the year.
  • Sell any redundant equipment and property
  • Tighten up stock control, making provision for old stock as appropriate
  • Make sure the premises look well maintained and tidy

Gradual handover - A gradual handover allows the current owners to be paid out over time which may be better for the business financially and it also gives chance for younger family members to start getting involved in the business.

You might also consider a transfer of management before ownership. This would allow a balance between outright transfer and retaining some management control. You might want to ensure the next generation have the capability to run the business before handing it over and losing control altogether.

4. Wills and Trusts 

Execute a Will to outline how you want your assets, including your business, to be distributed on your death. Your professional adviser will consider the liability to inheritance tax on your death and advise how best to minimize the liability. Establish trusts, to provide for the efficient transfer of assets, privacy, and potential capital tax savings. Trusts can be used as a way of protecting your assets until the beneficiary is old enough to look after the money or business themselves.

5. Business LPA

A Lasting Power of Attorney (or LPA) allows the person (the donor), to appoint an attorney(s) who will be able to make decisions and act for them if they were unable to make those decisions for themselves. A Business LPA works in the same way, but for the business. It can be used either temporarily if a business owner is on holiday or away for business, or permanently due to an accident or an illness meaning that they are no longer capable of acting. A business attorney must have the skills to carry out the role of the donor in a business, and the donor should consider giving specific and detailed instructions on what powers their business attorney would hold.

6. Life Insurance 

Consider using life insurance as a tool for covering potential inheritance tax liabilities or providing financial support to your family or business.

7. Minimize Taxes

Work with an experienced estate planning lawyer to employ strategies that can help minimize inheritance tax, such as annual gifting, charitable contributions, and valuation discounts.

8. Beneficiary Nominations

Ensure that the beneficiary nominations on your life insurance policies, retirement accounts, and other financial assets are up-to-date and aligned with your estate plan.

9. Digital Assets

Address the management and transfer of your digital assets, including online accounts, websites, and intellectual property.

10. Asset Protection

Implement asset protection strategies to safeguard your business and personal assets from potential legal claims and creditors.


Estate planning should not be a one-time event. Review your plan periodically to account for changes in your business, personal life, or tax laws and keep your documents up-to-date. We would also recommend considering having open and honest discussions with your family about your estate plan. It can help prevent misunderstandings and conflicts in the future.

Estate planning for business owners is a complex and evolving process. It's essential to seek expert advice to create a plan that aligns with your specific circumstances and goals. Consulting with legal and financial professionals who specialize in estate planning for business owners is highly recommended to ensure that your plan is both legally sound and tax-efficient.

Get in touch with our experts today.

Andrew Fielder
  • Director
  • Solicitor
  • Head of Business Legal Services

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