Can I Leave My Business in My Will?

Because a sole trader business is not a separate legal entity, you cannot leave 'the business' in the same way you might leave a company. Instead, your will should deal with the underlying assets: premises if owned, equipment, stock, vehicles, and any intellectual property such as a trading name, brand or website, along with instructions about outstanding contracts and debts owed to or by the business.

If you want someone to actually continue running the business rather than simply inherit and dispose of its assets, say so clearly, and make sure that person has, or can quickly get, the practical knowledge, any required licences, and access to suppliers and customers needed to keep it going without a lengthy gap.

You leave company shares as a specific gift in your will, naming the shares and the intended recipient. However, the gift only takes effect subject to the company's articles of association and any shareholders' agreement, both of which can restrict who is allowed to become a shareholder, or give other shareholders a right of first refusal before your chosen beneficiary can actually receive the shares.

Check whether your intended beneficiary would even be allowed to hold the shares under the current articles, and whether a cross-option agreement exists which might mean the shares are bought out rather than passed on directly. Where there is any tension between what you want your will to achieve and what the company documents actually allow, resolve it before relying on the will alone.

You cannot simply leave 'your share of the partnership' to someone and expect them to become a partner, since partnership is a personal relationship between the partners and the other partners are not obliged to accept a new person into the business. What you are usually able to leave is the financial value of your partnership share, as determined by the partnership agreement, which is paid to your estate rather than transferring partnership status itself.

If the partnership agreement is silent on death, the default position under the Partnership Act 1890 is that the partnership dissolves, which can significantly affect the value your estate actually receives. Check the partnership agreement carefully, and consider whether it needs updating to protect both your own estate and your fellow partners.

Whatever type of business interest you are leaving, vague wording causes problems. Identify shares by class and quantity if the company has more than one class, identify specific assets clearly if leaving a sole trader business, and cross-refer to the relevant business agreement where appropriate so your executors can see the full picture.

If your intentions depend on conditions, such as a beneficiary needing to demonstrate they can run the business, or a preference for the business to be sold rather than continued if no family member wants to run it, set this out clearly rather than leaving it to be guessed at.

A simple, wholly owned sole trader business or an unrestricted single shareholding can often be left through a straightforward online will. Once you have co-owners, restrictive company or partnership documents, or any real succession planning involved, a solicitor should be involved to make sure the will and the business documents work together rather than against each other.

This is particularly important where the value of the business is significant relative to the rest of your estate, since getting it wrong can create serious unfairness between beneficiaries or unnecessary disruption to a trading business.