Entrepreneurs: are you leaving a headache for your executors?

If you run your own business, it is likely to be one of your most valuable assets and often your family’s main source of income. But have you considered what would happen to it if you were no longer here?

Many business owners assume their family or executors will simply be able to step in and deal with things. In reality, without proper planning, a business can quickly become difficult to manage after someone dies, creating stress for families and potentially affecting the value of the business. Recent changes to inheritance tax reliefs also mean that many business owners should now review their will and tax planning arrangements.

Unlike property or savings, a business is an active asset. Contracts may still need to be fulfilled, employees will expect payment, suppliers will need managing and tax obligations will need to be dealt with.

If your executors are unfamiliar with the business, they may suddenly find themselves responsible for important decisions at an already difficult time. Delays or uncertainty during probate can quickly affect confidence, cash flow and the overall value of the business.

In this blog, we highlight some of the problems your family or executors may encounter.

No clear succession plan

If you have not documented who should take control of the business or how your interest should be dealt with, disagreements can arise between executors, beneficiaries and business partners.

Disputes over the valuation of shares, or the future direction of the business, can slow things down significantly and, in some cases, may even force a sale at less than full value.

Uncertainty over who can make decisions

Your executors do not automatically have the right to run or sell your business. The position can differ depending on whether you are a sole trader, in a partnership, or operating through a limited company.

If this is unclear, valuable time can be lost while the legal position is clarified. In the meantime, important business decisions may be delayed and day-to-day operations can suffer.

No lasting power of attorney

Many business owners focus on what happens after death, but they overlook what would happen if they became unable to manage the business during their lifetime through illness or loss of mental capacity.

Without a suitable lasting power of attorney in place, there may be nobody with the legal authority to make important business or financial decisions on your behalf. This can create significant disruption, particularly where the business relies heavily on one individual.

A properly prepared lasting power of attorney can help ensure that trusted individuals are able to deal with banking, contracts and other key matters if needed, helping the business continue to operate smoothly during difficult circumstances.

For some business owners, separate arrangements may also be needed to deal specifically with business interests and decision making.

Changes to Business Property Relief

Many business owners have historically relied on business property relief to reduce or remove inheritance tax on qualifying business assets. However, the rules changed from 6 April 2026.

Under the new regime, the first £2.5 million of qualifying business assets can still benefit from 100% relief. Assets above this threshold generally qualify for relief at 50%, which can leave part of the business exposed to inheritance tax at an effective rate of up to 20%.

As a result, some business owners and family companies who may previously have expected their business interests to pass free of inheritance tax could now face significant tax liabilities.

This makes succession planning increasingly important, particularly where a business forms a substantial part of the estate. Reviewing your will, shareholder agreement and wider tax planning arrangements is therefore more important than ever.

Unexpected tax liabilities

Alongside inheritance tax considerations, there may also be capital gains tax or corporation tax issues to address, particularly if business assets are sold or the business continues trading during the administration of the estate.

Without proper planning, this can lead to unexpected tax liabilities and additional costs for your estate.

Disruption to the business

Banks may restrict access to business accounts until probate is granted. Key decisions may be delayed and customers or suppliers may lose confidence.

Even short-term disruption can affect profitability and reduce the long-term value of the business.

Employee responsibilities do not stop

If you employ staff, then their wages and pensions must be paid, and other employment responsibilities still need to be dealt with after death. If the business is sold or transferred, there may also be additional legal obligations towards employees.

Without proper planning, this can create extra pressure and cost for your executors and family.

The real cost to your family

If clear arrangements are not put in place, your executors may face legal uncertainty, financial pressure, and even a potential dispute, while trying to administer your estate.

The business you spent years building can quickly lose value through delay, disagreement or poor planning.

How you can protect your business

Planning now can help avoid many of these problems.

You should consider:

• ensuring your will properly reflects your business structure;
• reviewing shareholder or partnership agreements;
• putting a clear succession plan in place;
• making appropriate lasting powers of attorney to help protect business continuity; and
• taking specialist tax advice in relation to business property relief and inheritance tax planning.

Taking these steps now can help preserve stability, protect the value of the business and give your executors clarity at a difficult time.

How we can help

Our private client team advises entrepreneurs and business owners on succession planning and estate planning.

We can help ensure your will and business arrangements work together effectively, identify potential risks and put practical structures in place to protect both your business and your family from avoidable stress and financial loss.

For advice on business succession planning or estate planning, please contact a legal adviser in our Private Client team at one of our offices – York, Selby, Malton or Pickering.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.