The Dangers of DIY Wills For Business Owners

The latest trend in bad legal advice is the DIY will. There are packs you can order in the mail and even apps that promise to help the user to create a custom will. While this might be the easier option, this isn’t sufficient for business owners. Including your business in a DIY will might be just as problematic as leaving it out. The problem with the DIY version is that legal language is very complex and what might look good to a normal person could be problematic from a legal perspective and could leave room for dispute. This leaves plenty of room for people to dispute your will after you are gone, which can be problematic and distressing for your close family.

If you have a clear idea of what you would like to happen to your business in your absence, then working with a lawyer to write your will is essential. Your will can also form the basis of your succession plan for when you retire, so it’s like finalising two documents at once. It can also help to decide what should happen to your business if you are temporarily unable to run your business due to an accident or illness. If you were in an accident and couldn’t work for a while, a will would help your business to keep running in your absence as it would provide a good indication of your intentions. For this reason, a DIY will could never be sufficient as it cannot cover all of your bases. Here are three things a DIY will cannot solve:

Succession planning

Succession planning for a business can mean planning for your retirement, or it can mean planning for if the worst should happen. You probably have a good idea of who should take over the business in your absence. If you have children, perhaps one child will take over. If this is the case and you fail to mention this in your will, even if only one child works in the business, your business will have to be split fairly between all parties. This could lead the child who works in your business without a job as the company may have to be sold in order to divide it up. Alternatively, one sibling may be put under undue financial strain in order to be able to buy their siblings out of the business. This could put the future of your business at risk in any scenario. Succession planning is the best way to ensure that your entire family gets a fair share of your assets when you are gone.

Tax efficient savings

If you pass away and your business is passed to your spouse, they may want to sell the business rather than keep running it. If this happens, the proceeds will then become part of their estate and subject to inheritance tax when your spouse passes away. Alternatively, you could leave the business to a trust and your spouse and children can continue to benefit from the business after you have passed away.This is a much more tax-efficient way to hand over your business and will ensure that your family can continue to benefit from the business for years to come.

Preventing disputes

The problem with DIY wills is that they are too generic and therefore open to interpretation. If any of your family members take dispute with the language used in the will, it won’t take much for a lawyer to pick apart the language and make your will void. If you’ve already passed away, this will mean that you don’t have a say in how your business and estate is divided up. This can lead to unnecessary disputes with your family if one or more members takes issue with the division of assets after you pass away. Family disputes are easily avoided if your will is clear. Not only is this difficult for your family, but bringing in dispute resolution solicitors can prolong the grieving process in an unnecessary way.

Your final wishes

Wills can also be used alongside a letter of wishes in order to iron out any of the other details of your life that don’t make up the main will, which is often financially minded. Your letter of wishes, on the other hand, is the loose ends of your life that you want to tie up. This can include items related to your burial or cremation, or even dividing your personal assets which have no value other than sentimental. If you have a pet, for example, the letter of wishes would outline who you would like to take care of the pet.

What If I Already Have a DIY Will?

If you’ve already created a DIY will, it isn’t too late to update it. You can still use the DIY version as the basis of your will and ask a legal professional to look over the language usage and point out any areas where your will may be lacking. Even if they decide that your DIY will is sufficient for your needs, it can help to have a legal professional look over it to check that nothing in the will is likely to be disputed. If nothing else, a legal professional will be able to ensure that the will is appropriately witnessed to prevent any future disputes.

 

In conclusion, it might surprise you to learn that a poorly written will can absorb as much of 10% of your estate in the probate process due to additional fees and poor tax planning. This could have a significant impact on your family. However, if you own a business, this could mean the end of all your hard work as the business might not survive the drawn out probate process. A company with disputed ownership is unlikely to survive for very long as no one will be able to make the key decisions required to keep your business running. Your will may just be the most important document you ever write for your business, so it makes sense to leave it to the professionals instead of heading down the DIY route.

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