Many business owners often focus on growth and achieving the day-to-day operational demands of their business, failing to recognise the importance of what happens when they are no longer there to lead it. Business succession planning involves identifying successors and preparing for the transfer of leadership and ownership of your business when you retire or cannot continue management.
According to the National Association of Corporate Directors, less than one in four private business owners have a formal succession plan in place. Following recent changes to inheritance tax for businesses in the Autumn Budget 2024, it is a good time to start planning for the long-term survival of your business. A strategic succession plan not only helps to ensure continuity of your company, but will also drive growth, reduce tax and facilitate your retirement.
Wills
Putting a Will in place is the simplest, yet arguably the most important, method of succession planning, allowing you to legally define the succession of your business. Through a carefully drafted Will, you can specify how you want your assets—including your business—to be distributed on your death. You can choose entrusted executors in your Will who will be responsible for managing and distributing your business assets according to your wishes. You can also include a trust in your Will that will protect your business if you have beneficiaries who are minors and cannot manage finances themselves.
Lasting Powers of Attorney (LPA)
An LPA is another important consideration for business owners, allowing you to appoint a trusted individual to manage your financial and business affairs should you lack capacity or are physically unable to do so.
The consequences for you and your business when you do not have a properly executed LPA in place are wide-ranging—particularly for sole business owners. Without an LPA, a costly court application will be required to appoint a Deputy to act on your behalf, who may not understand or carry out your wishes. While partnership agreements may address lack of capacity, an LPA offers a more comprehensive solution by managing all your personal financial matters and providing greater legal protection.
Tax Planning
Recent changes in the Autumn Budget 2024 have capped Business Relief against inheritance tax up to the value of £1 million, with any value exceeding that cap being taxed at a rate of 20%. Lifetime gifts and charitable contributions that are appropriately timed and structured can lock in the favourable Business Relief regime and enable the transfer of your business to be managed in the most tax-efficient way.
Overall, a strategic, long-term approach to business succession planning should be an integral part of your business strategy and operation. Planning ahead will safeguard the long-term success of your business and protect your business assets. By seeking further legal advice from our team, we can help you with all aspects of succession planning for your business when it comes to making a Will and Lasting Power of Attorney.
For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email [email protected]
Written by Inna Zahorodna
Solicitor, Wills Trusts and Estate Planning at Franklins Solicitors LLP
Specialises in Wills of varying complexity, Lasting Powers of Attorney, Deeds of Variation, probate and intestacy applications, and full estate administration with or without a Will.
Inna Zahorodna is a Solicitor in the Private Client team at Franklins Solicitors LLP. She qualified in July 2023 after completing her Law and Criminology degree at the University of Brighton and the Legal Practice Course at the University of Law.
Inna advises on a range of Private Client matters, including Wills, Lasting Powers of Attorney, Deeds of Variation, Probate applications, and full estate administration—both testate and intestate. She is known for her approachable manner and for supporting clients through sensitive matters with clarity and care.
Outside of work, Inna enjoys travelling, hiking, and spending time with friends and family.
