Our legal columnist on the sensitive issue of what happens when business owners die intestate


What happens to my business if I die without making a will?

Owning and developing a business can take years of hard work, but have you ever considered what would happen to your business if you died without a will? Estate administration can be difficult in any situation, but there are likely to be added complications if you have a business without anyone appointed to take charge when you are gone.

What happens if you die without making a will depends on what type of business you have and whether you have any other documentation in place. Generally, if you die without making a will your estate is distributed in accordance with the law which is based on your marital status and surviving family members. This could mean that grieving and possibly inexperienced (or even estranged) relatives would be responsible for managing your life’s work. Your business is not an indistinguishable asset, it belongs to your estate unless there are legal documents stating otherwise.

As a sole trader you are the legal owner of the business. The business is an asset which would likely die with you. Any business assets such as tools, plant and machinery will form part of your estate and be distributed in accordance with the law.

What happens to my limited company or limited liability partnership (LLP) if I die without making a will?

A limited company or LLP is a separate legal entity, so on death of a sole shareholder and director the business will continue to trade until a further director appointment has been made. This will mean that your direct debits and standing orders set up from your business account will continue after you pass away. This can cause a problem if your business account becomes overdrawn during the administration period.

If you are a shareholder of a limited company or a partner in an LLP, you may have covered this eventuality in your articles of association or in a shareholder’s/partnership agreement. If not, your shares of the business will form part of your estate and be distributed amongst certain family members. Your surviving shareholders may not be pleased to learn that your spouse, civil partner or teenage children, who never got involved with your business, now control your shares.

Our specialist commercial team at Bell & Buxton would be happy to discuss these and any other business issues in complete confidence.