What to do if your business partner dies

Planning for succession is often overlooked until it's too late. If a co-founder or partner passes away without having an estate plan in place, the impact on their business could be severe and long lasting. Prioritising this planning now can help your company avoid devastating results later.

Following the death of a business partner, often their estate is subject to laws of intestacy. This means any share in physical assets may be distributed among family members--potentially leading to an obligation for them to sell such items within a year and satisfy Inheritance Tax liabilities.

You as the surviving partner could find yourself at odds with bereaved relatives who lack experience or interest regarding company operations during what can be an emotionally intense period.

When facing death, the lack of a plan can lead to major consequences. In this case, it could mean that debts are left unpaid, and you may have no legal recourse for recouping joint assets or shares in your business partnership with your partner after they've passed away.

That's why probate is so important: without it delays occur which can make settling an estate more complex than necessary – thus causing potential financial loss.

Creating and updating a Will is an important step that shouldn't be overlooked when someone has made significant life changes such as getting married, having children, or starting a business. If your partner's Will was created prior to these key commitments being established in their lives, then it could be invalidated by the rules of intestacy - potentially leaving you facing difficult decisions about the future of any shared businesses.

It’s crucial for all parties involved to ensure that everyone’s Wills are frequently reviewed and kept up-to-date with life events so everyone can rest easy knowing everything will remain secure moving forward.

If the unthinkable should happen, a Partnership Agreement can provide guidance on how to move forward. This may include details of how one partner purchases the other's business share from their Estate in an orderly fashion.

Protecting your business from an unanticipated death doesn't have to be stressful—you can provide for the future of both your family and company. Consider forming a Family Trust, which allows you or partner's share in the firm to be passed on without absorbing their Inheritance Tax allowance; ensuring they benefit while avoiding any potential increase in taxes.