Dying intestate has serious implications. But if you are a business owner the implications can be far greater.
As a sole trader or partner in a business, the assets of your business or your share of assets owned by the partnership will be treated as part of your estate. By making a will it gives you the opportunity to ensure the business passes to whomsoever you choose to take over the running of it in the event that you should die.
Making a will also enables you to control what happens to the assets of the business, or your share of the assets, if you should die. If you don't make a will, under the rules of intestacy such assets may end up passing to someone other than your preferred beneficiary.
Even if you have a will it is important to remember that your share of any property you own in a ‘joint tenancy' with another person, for example a business partner, will automatically pass to the surviving joint tenant(s) if you should die - irrespective of what is stated in your will.
Currently Inheritance Tax is payable at 40 per cent on estates valued at more than £325,000, and is also sometimes payable on gifts or trusts made in the seven years prior to a person's death. But because of certain exemptions and reliefs available to business owners IHT is sometimes not payable even when an estate exceeds the threshold.
If you own a business, or a share of a business, Business Relief may enable you to pass on some of the business free of tax - either during your lifetime or by making a will. Business Relief can be claimed on a business or an interest in a business, on shares that are not listed on a recognised stock exchange, or on a holding of shares or securities which give you control of a company that is fully listed on a recognised stock exchange.
Business Relief also applies to land, buildings, plant or machinery that has been used wholly or mainly by the business for two years prior to the business being passed on, or which have been used by the business and held in a trust which gave you the right to benefit from them.
So by making a will you may be able to reduce your estate's liability for Inheritance Tax or even avoid your estate from paying it altogether.