Succession and ensuring your business succeeds 

Succession planning is a fundamental consideration for any business owner. It is particularly important where the business represents a substantial part of your estate, and especially so when family members are involved.    

A structured succession plan is not limited to deciding who will inherit the business on death. It should address how ownership, management and control will pass during your lifetime or on death, how the transition will be funded, how disputes will be avoided, and how the value of the business will be preserved. For many business owners, succession planning is therefore both an estate planning exercise and a risk management process. 

The importance of succession planning 

Many business owners devote significant time to building and growing their business but give comparatively little attention to what will happen if they retire, lose capacity, become seriously ill or die unexpectedly. Without a clear plan, the business may be left without effective leadership at precisely the time when decisive action is required. 

The absence of a succession plan can create uncertainty over who has authority to operate bank accounts, enter into contracts, deal with employees, negotiate with suppliers or make strategic decisions. It may also lead to disputes between family members, business partners, executors, beneficiaries and surviving shareholders. In some cases, the lack of planning can result in a forced sale, loss of goodwill, departure of key staff or a material reduction in the value of the business.   

The role of a will and trusts  

A will remains an essential document for any business owner, but it is rarely sufficient on its own. A will can deal only with assets that form part of the owner’s estate. It may therefore be effective to pass personally held shares, business assets held in the owner’s own name, loan accounts, intellectual property or other personal interests connected with the business. However, a will does not usually govern assets owned by a company, assets held in trust, jointly owned assets passing by survivorship, or rights regulated by separate contractual arrangements. For example, shares in a company may be subject to restrictions in the articles of association or a shareholders’ agreement. A partnership agreement may determine what happens on the death or retirement of a partner. A trust deed may regulate succession to control of a family trust. 

It is therefore important that the will is reviewed alongside the wider business structure. Inconsistency between the will, company documents, partnership agreements, trust deeds and insurance arrangements can create uncertainty and, in some cases, unforeseen litigation. 

Trusts are often used in family business and asset protection structures. They can be effective, but they require careful succession planning and tax considerations, particularly given the inheritance tax changes applicable to businesses that were effective from April 2026.  

The trust deed should be reviewed to identify the relevant powers and succession mechanisms. The will should also be considered in conjunction with the trust arrangements.  

Planning for incapacity 

Succession planning should not focus only on death or retirement. Incapacity can be equally disruptive. If a business owner loses mental capacity, even temporarily, the business may require immediate decisions about payroll, contracts, banking, tax, regulatory compliance and staffing.  As such, in England and Wales, a Lasting Power of Attorney (LPA) for property and financial affairs can be an important part of the succession framework.  You can put in place a business specific LPA where, for instance, you may not want family members managing the business.   

Family business succession 

Family business succession often involves additional sensitivities. The owner may wish to pass the business to the next generation, but not all children or family members may be involved in the business. Equal division of ownership may appear fair, but it can create commercial difficulties if only one child has the skills, commitment or experience to run the business. 

A successful family succession plan should distinguish between fairness and equality. In some cases, the appropriate solution may be for the child working in the business to receive control of the business, while other beneficiaries receive different assets, insurance proceeds or financial provision from the estate. In other cases, non-voting shares, dividend rights or staged payments may be used to balance family expectations.   

Tax considerations 

As referred to above, tax is an important aspect of succession planning. In the United Kingdom, relevant issues may include inheritance tax, capital gains tax, income tax, stamp duty or stamp duty land tax, and the tax treatment of insurance proceeds or company distributions. 

Business Relief may reduce or eliminate inheritance tax on certain qualifying business assets, but the availability of relief depends on the nature of the business and the structure of the ownership. Not all business assets qualify, and relief may be restricted in some circumstances.  

Conclusion 

Succession planning for business owners requires a coordinated approach. It should bring together the owner’s will, powers of attorney, company or partnership documents, trust arrangements, insurance, tax planning and commercial objectives. The aim is to ensure that the business can continue, be sold, or be transferred in a controlled and orderly manner. 

The most effective plans are put in place before a crisis arises. By addressing these points in good time, you are creating a plan to ensure strong and clear succession of your business.   

For more information or if you need legal expert advice, contact gunnercooke Partner Amy Lane HERE.