Estate Planning and the Business Owner

Or, Last Will and Testament for the business person.  My favourite malapropism ever is ‘The French don’t have a word for entrepreneur’.  So much for levity.  The entrepreneur, especially when he is setting up his or her business has several things to contend with – the list is almost endless and depending on how well organised one is Parkinson’s law would assert itself as almost inevitable. The thought of inheritance or more coldly and cruelly death is generally far from one’s thoughts at a time of optimism and general excitement.

Britain, anecdotally and statistically is a land of the entrepreneur – it would be an act of profound unkindness to bore you with the figures, ratios and  proportions so I shall contain that natural tendency to play the part of the anorak.  However, we must remind ourselves of people who would not normally consider themselves needing of making arrangements for their inheritance because they would feel they were of modest wealth or worse that they were not in business. 

One of my very first clients, over 2 decades ago had been left an inheritance by a great aunt who had been a member of the Bloomsbury Set – in 2010 values, this client of mine gets between ten and twenty thousand pounds per annum from the rights to one book – just by way of diversion, my client was born after her forebear had died.

Writing a last will and testament is not one of the first things that comes to mind for someone who is going about the tasks involved in setting up and running his or her business.  The unspoken though of the business person building wealth 0r a wealth producing asset to be enjoyed in years to come – there’s the catch - years to come.  The very randomness of life implies some folk would die during their working lives a certain inherent short sightedness is built into the make up of the entrepreneur.  From earlier in this write up, it is apparent that there is a class of people who would generally fail to recognise themselves as business folk who need to have an up to date last will and testament.  These are artistic or creative types – after all the income would roll in for at least seventy years after the death of the artist – and with a bit of lightness of foot, it could the generated for a few decades longer. This a niche that enjoys the benefit of residual income. This is exemplified my experience of having several clients who were minor pop stars in the 1960s and 1970s, their modest but recurring royalties would hardly enable them to live the life of Riley, but they have as a rule been able to set aside the funds to pay for private education for their children, grand children, and in a couple of cases, great grand children.

The income lives on, long after the death of the business man – this in truth is the unarticulated sentiment of most people when they enter into business, its like a sort of Maslow’s Hierarchy of Needs – satisfy the basic needs of feeding one’s self and family, and then go on to fulfil higher status needs such as building a ‘legacy’.

Estate planning – at the bare minimum writing a last will and testament provides the business – and its owners the chance to resolve the question of the passage of the  ownership of the enterprise on the demise of its current owners  - which would happen in the fullness of time. It creates peace of mind for the employees and helps attract a higher calibre of staff – the question of proprietorship hence the inheritance, if not management would at least be resolved by drawing up and keeping up to date the last will and testament of the firm’s owners.