Probate for Business Owners
Our specialist Business Probate Solicitors have years of experience dealing with the estate administration and probate process for business owners. Our team is by your side to ensure that you receive tailored and expert legal advice.
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When a person dies, everything they own forms part of their estate, including any business interests. Dealing with businesses can make the probate process lengthier and more complex than usual. Having an experienced probate solicitor on your side helps to resolve any issues that may arise so that the process is as easy as possible.
The legal process known as Probate must be undertaken when a business owner dies, so business assets can be sold or transferred. The personal representative or executor of the will is responsible for obtaining a Grant of Probate before they can administer the estate according to the deceased’s wishes.
At Rowlinsons our Estate Administration team are experts in matters relating to business probate. In October 2023 our estate administration team was highly commended in the category ‘Private Client Team of the Year – boutique’ at the British Wills and Probate Awards. In 2018 we received the National Law Society Award for Excellence in Private Client. Our team were also highly commended in the Solicitor Firm of the Year (North) category at the 2018 British Wills and Probate Awards.
Our Estate Administration team includes solicitors who are full members of STEP (Society of Trust and Estate Practitioners) and have received a STEP Worldwide Excellence Award, demonstrating our commitment to bringing you the highest quality of service.
You’ll have direct telephone and email access to our award-winning solicitors and assistants for a fast response, so we’re with you every step of the way.
When a business owner dies, their company may be the most significant asset in the estate. It may include physical assets such as equipment, machinery, or property. Whether the business operated as a sole trader, in partnership or as a limited company the assets involved will need to be properly evaluated before they can be dealt with. This means that the probate process will typically take longer to resolve than for simpler estates.
Business assets are usually placed into trust for the beneficiaries until probate is granted and the assets can be distributed.
There will be issues to deal with immediately such as whether or not the business can continue to operate and who will run the business in the meantime. There may be employees to think about as well as the day-to-day running of the business.
What happens to a business when the owner dies depends on the structure of the business. If the business was a partnership, the surviving partner may simply carry on with operations. For sole traders, the personal representative might have to decide whether to cease trading or carry on as normal. They may find themselves having to step in and help run the business while waiting for matters of probate to be settled.
Identifying assets and obtaining valuations may be difficult while being responsible for employees, dealing with debtors and creditors, and running the normal day-to-day activities of the business. Issues around probate and business are rarely straightforward and there is a risk of a long-drawn-out process if complications arise.
That’s why it’s essential to get expert legal help early on so you can make the right decisions to do what’s best for the business and anyone involved with it.
When evaluating a business, it is crucial to note the structure of the business and whether it’s a sole trader, partnership or limited company.
Where the deceased owned the business themselves outright there will be no distinction between their personal finances and the business.
When someone jointly owns a business with one or more people there is also unlimited liability, and the owners are held personally responsible for debts or creditors. What happens to the business when one partner dies depends on the terms laid out in the partnership agreement.
The deceased may have personally owned assets used by the business such as premises, which could complicate matters. Specialist legal advice may be needed here to determine what happens to the partner’s share.
A limited company limits the liability on the owner. The business itself takes on debts or owns profits separately from the finances of the owner(s). It’s common for family businesses to be structured this way.
If the deceased owned shares in a public or private limited company the shares will form part of their estate and be sold or transferred as part of the process.
How are business assets valued in probate?
Many businesses will own property and other assets, especially if the deceased was the sole owner. These include stocks, vehicles, property, machinery, and equipment. Before probate can be granted the business assets need to be accurately assessed and valued.
His Majesty’s Revenue and Customs also require the company’s accounts for the three years leading up to the date of death and the final balance sheet showing the statement of financial position. The personal representative will be responsible for settling any income tax due.
Valuing assets is not always straightforward as the ‘on paper’ may not reflect the actual value at the date of death. Inaccurate valuation could mean having to pay more inheritance tax now or be liable for capital gains tax later when assets are sold.
It may be necessary to instruct experts such as a chartered surveyor to accurately assess commercial property owned by the business and an accountant to run a full audit of the business accounts. Rowlinsons can provide financial asset searches for probate and liaise with other professionals who can help speed up the process and save you money in the long run.
Once the valuation is settled, if there are complexities around the sale or transfer of business premises, our conveyancing team can help make the process go smoothly.
Do you pay inheritance tax on business assets?
Accurate valuation of business assets is essential so that you do not over or underpay inheritance tax. However, some businesses are eligible for Business or Agricultural Tax Relief. Business Relief reduces the value of a business or its assets when working out how much inheritance tax has to be paid. Depending on the ownership or structure of the partnership the value of Inheritance Tax could be reduced or even exempt.
As the executor of the will or administrator of the estate, you can claim Business Relief on property, buildings, unlisted shares, and machinery when you’re valuing the estate.
If you’re unsure about tax relief options, or about how to approach this in a tax-efficient way, contact Rowlinsons today. We have years of experience dealing with business estates and can advise you on the legalities of inheritance tax to avoid overpaying or underpaying.
How are business assets distributed in probate?
The probate process typically takes around 6-12 months but for a business, this could be longer. Once probate has been granted the executors can start to distribute the business assets in accordance with the will. For a sole trader, the business assets will be treated the same as personal assets.
If the deceased has made preparations in their lifetime for the succession of the business the process can be fairly straightforward. There may be an agreement or will clause in place to outline how assets are to be dealt with and this will help speed up the process, but matters can be complicated if there are other circumstances involved such as disputes.
Can I transfer ownership of a business during probate?
Transferring ownership of a business after the owner’s death involves a legal process which can be as simple as transferring ownership to the beneficiary. The preferences specified by the deceased will be taken into account such as restrictions placed upon potential buyers. For more complex situations you may need to instruct a commercial property lawyer.
For a limited liability company, there may be documentation in the shareholder agreement about how shares should be dealt with. Sometimes the other shareholders have first refusal to buy shares. There may be terms that prevent certain individuals from buying them or an agreement that beneficiaries can buy out other shareholders.
Rowlinsons offers specialist legal advice to the family, business partners or loved ones of the deceased. We understand that the period after the death of a loved one is an emotionally difficult time. That’s why we provide a friendly, knowledgeable service tailored to your requirements. You’ll get practical advice and guidance if you’re dealing with it yourself or we can handle the whole estate for you. This saves you time and reassures you that your loved one’s estate is being dealt with effectively.
At Rowlinsons, we are not only probate specialists, but a full-service law firm. If you need any assistance with legal matters related to your probate case, we have in-house solicitors specialising in other areas of law such as commercial property. Our combined expertise makes the business probate process as straightforward as possible.
Our team of Business Probate Solicitors regularly supports clients across Cheshire, the North West, and the UK. Based in our offices in Frodsham and Runcorn (Sutton Weaver), Rowlinsons has built an impressive reputation thanks to our professionalism and expertise in all areas of Probate and Estate Administration services.
We have dealt with the administration of the estates of business owners in all areas surrounding Warrington, Widnes, St Helens, Chester, and Northwich. Our team is highly skilled, qualified, and approachable, and can guide you through the most complex of cases with ease.
Call us today for an initial no obligation call or click here for a call back. We also have meeting facilities in North Wales for Family Law clients.
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