Do you have an up-to-date will? - Veterinary Practice
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Do you have an up-to-date will?

Why you should join the minority – particularly if you have your own veterinary practice

Around 60 percent of the UK population does not have a will, including a third of those aged over 55. For any business owner, dying without making a will and/or planning the succession can have a devastating effect, not only on the family but on the business too.

Angharad Lynn, a solicitor in the Private Client team at law firm VWV, says that if you die without a will, your estate will be passed on according to the intestacy rules which changed in October 2014 when the Inheritance and Trustees Powers Act came into force. “Under the new rules,” says Lynn, “if an individual dies, leaving a spouse and children, the spouse will take the statutory legacy (currently £250,000) and the rest of the estate will be divided equally between the spouse and the children. If there are no children, the spouse inherits the whole estate.”

She warns that it is particularly important for unmarried couples to have a will as the intestacy rules take no account of such relationships: “If the couple have children, they will inherit everything. If not, the estate will go to other blood relatives. The surviving unmarried partner will receive nothing.”

Choosing an executor

It’s an executor who administers estates after death. There is no limit on the number you can name in your will. However, the maximum number of people who can take the grant of probate is four.

Lynn says it’s quite normal to appoint a spouse or children as executors but suggests that it is also worth appointing a professional who can ensure that business assets are dealt with as you would wish. This can be an individual, such as your solicitor or accountant; alternatively, many professional firms have a trustee company that can act as an executor. The advantage of this is that while your own lawyer or accountant may have retired (or died) by the time of your death, the trustee company will provide continuity for the appointment of executors, enabling partners from the firm to act. The retirement of your own lawyer will not mean that you need to update your will.

Plan to save on inheritance tax

Tax planning after death must be a consideration and Lynn notes that one of the reliefs from inheritance tax is Business Property Relief (BPR), which is available for a business or an interest in a business, as well as land, buildings, plant and machinery used for the business and shares in unquoted trading companies. “BPR is currently awarded at 50 or 100 percent,” says Lynn, “it’s a very generous relief and it is possible that its use will be curtailed in a future budget. So, when planning your succession, ensure your business will qualify for BPR by checking it meets the scheme requirements.” To qualify, businesses must be trading, and if the proportion of assets held in investments is too high, the business may not be able to use BPR.

Use trusts for flexibility

Business owners often want flexibility after death and it’s for this reason that Lynn says it can be useful to leave business assets in a discretionary trust in the will, with the surviving spouse and children as potential beneficiaries of the trust. “These very flexible arrangements allow decisions to be taken after death, rather than trying to predict at the time the will is made what the situation will be in the future. After death the business interests can be kept in trust and income paid to the children, or shares can be transferred out to the children in appropriate proportions, depending on who is most involved in the business.”

If there is any doubt whether the business assets will qualify for BPR, or if the business owner is concerned that BPR may be curtailed, a trust that has as potential beneficiaries both exempt (the spouse) and non-exempt (the children) beneficiaries can be useful. Lynn explains: “On the death of the business owner, the beneficiaries can ascertain whether the business assets will qualify for BPR. If it does apply, then under s.144 of the Inheritance Tax Act 1984 the trustees may decide to transfer the assets out to the children and wind up the trust. No inheritance tax will be payable.

“If the shares do not qualify for BPR, the assets could be transferred out to the spouse, again ensuring that no inheritance tax is payable (thanks to the spouse exemption).” Provided this is done within two years of the death of the business owner, these steps can be “read back” into the will so that it is as if the deceased had left the assets in this way for inheritance tax and capital gains tax purposes.

If there are family members who are not involved in the business, a trust can protect a business. If uninvolved family members inherit shares directly, they may want a say in the running of the business, even if they do not have the skills or experience to be involved. Using a trust means the beneficiaries would not have a direct right to any interest in the business and therefore would have no direct influence.

Lynn says that if you are including a trust in your will, you should also include a letter of wishes to be stored with your will, giving guidance to your trustees about how you envisage the trust being used after your death. “A letter of wishes is not legally binding, and it is important to state that you do not intend to fetter the discretion of the trustees. However, the letter can explain to your trustees how you see the capital and income of the trust fund being used after your death.”

Review business documentation

Another piece of advice from Lynn is to ensure that business documents, such as the articles of incorporation and shareholders’ agreement, accord with the wishes set out in your will. Further, she says, ensure your business has the correct documentation in place. “Take a partnership – in the absence of a partnership agreement, the provisions of the Partnership Act 1890 apply. Under this Act, on the death of a partner, the partnership is dissolved. This could leave a surviving partner in a very difficult position. They would have to wind up the business, pay the debts of the partnership, and distribute whatever is left.”

Assets that can be left by will

In your planning, it is important to remember a spouse as assets held jointly can be owned in either of two ways. Lynn says that they can be owned as joint tenants or tenants in common – and this is true for all assets, from your family home to shares in your business: “In essence, if an asset is owned as a joint tenancy, it will pass outside your will, by the law of survivorship. This means that if the shares in your business are held with your spouse as a joint tenancy, they will pass automatically to your spouse on your death and not by your will, regardless of the provisions of the will.”


The vast majority of people do not have a will in place and when their business interests are considered, they are sending their family into dangerous territory should they die. Quite simply, the wishes of the deceased will not be known; the law will step in and determine how assets are distributed, leaving survivors in a position that they had not expected.

Adam Bernstein

Adam Bernstein is a freelance writer and small business owner based in Oxfordshire. Adam writes on all matters of interest to small and medium-sized businesses.

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