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Family Business Succession: Passing It to the Next Generation

· 28 min

Note: The following scenario is fictional and used for illustration.

James had his wake-up call at 58. After a mild heart attack, the Leeds manufacturing business owner who'd spent 30 years building his company's value to £2.8 million realized he had no succession plan. His daughter Sarah worked alongside him as operations director. His son Michael taught biology in Manchester and had no interest in manufacturing.

Without a will, intestacy rules would divide ownership equally between both children. Sarah would be forced to negotiate with her brother or worse—sell the business to pay out Michael's share. The company employing 42 people and serving customers for three generations could collapse.

James isn't alone. 69% of UK family business owners have no succession plan detailing who will own and run their business after death. For the 4.8 million family businesses in the UK employing 13.9 million people, this lack of planning creates devastating risks.

This guide shows you how to protect your life's work with proper will-based family business succession planning.

Table of Contents

Why 69% of Family Businesses Have No Succession Plan

Research from STEP (Society of Trust and Estate Practitioners) reveals that 69% of UK family business owners have no succession plan. Even more concerning: only 32% have up-to-date wills.

The scale of this problem is staggering. Family businesses make up 85% of all UK private sector firms, generating £575 billion in economic value annually. Yet the vast majority of owners haven't planned what happens when they die.

Why this dangerous procrastination?

The top reason is simple: 27% of business owners know they should create a succession plan but haven't got around to it. Another 15% think there's plenty of time to plan. A further 14% don't have a clear successor and avoid the difficult decision entirely.

But beneath these practical excuses lie deeper psychological barriers. Many business owners' identities are completely tied to their companies. Planning succession feels like planning their own irrelevance. The fear of losing purpose and control creates powerful resistance.

Richard, 61, owns a successful plumbing supplies business in Bristol worth £1.2 million. He's been "meaning to sort out" succession for eight years. His eldest son works in the business, but his daughter lives in Scotland. Every time Richard tries to discuss it, someone changes the subject.

Now the 2026 BPR changes mean his inaction could cost his estate £200,000 in unnecessary inheritance tax. More critically, his employees' jobs depend on a succession plan that doesn't exist.

This avoidance creates three major risks: massive tax bills, forced business sales, and family breakdowns. Yet only 44% of family business owners have even discussed succession with their families.

The conversation you're avoiding today could save your business tomorrow.

What Happens to Your Family Business Without a Will

Without a will, intestacy rules treat your business shares like any other asset. The government's automatic distribution ignores everything that makes your business operational: who has the skills to run it, who's dedicated years to building it, who employees depend on.

For married business owners, intestacy gives your spouse up to £322,000 plus half the remainder. Your children split the other half. This creates complicated shared ownership that can paralyze decision-making.

Consider the specific scenarios:

If you have one child working in the business and one who isn't, intestacy divides ownership equally regardless of involvement. The uninvolved child suddenly owns half your company without any operational responsibility. Your working child faces impossible negotiations or a forced buyout they can't afford.

For unmarried couples who co-run businesses together, intestacy is even more devastating. Your partner inherits nothing under intestacy rules, no matter how many years you've built the business together.

Susan and her unmarried partner David built a graphic design agency worth £800,000 over 15 years. When Susan died without a will, her shares went to her parents under intestacy rules. David, despite being co-owner and operations director, had no automatic inheritance rights.

The business nearly collapsed during the eight-month legal battle over ownership. Client relationships deteriorated. Three employees left. By the time Susan's parents agreed to sell David the shares, the company's value had dropped to £480,000.

Here's how different scenarios play out:

Scenario With Will Without Will (Intestacy)
One child in business, one not Leave shares to involved child, cash to other Both get equal shares, forced negotiation
Unmarried business partner Can inherit business continuity Partner inherits nothing, business vulnerable
Multiple shareholders Clear succession plan Intestacy divides your portion unpredictably
Business and family assets split Structured separation Mixed together, IHT consequences

The timeline chaos compounds the damage. Intestacy creates months of uncertainty while the estate is sorted. During this period, no one has clear authority to make strategic decisions. Major contracts stall. Investment plans freeze. Competitors circle.

For businesses employing 13.9 million people across the UK, this uncertainty threatens livelihoods, not just inheritances.

Will vs Shareholders Agreement: What You Actually Need

Many business owners confuse wills and shareholders agreements or think they need only one. Understanding the different roles is essential for protecting your business.

Your will determines WHO inherits your business shares when you die. It's a straightforward transfer of ownership: "I leave my 60% shareholding in Smith & Sons Ltd to my daughter Emily."

A shareholders agreement governs HOW those inherited shares operate within the company. It controls transfer restrictions, voting rights, valuation methods, and buy-sell provisions.

Think of it this way: your will transfers ownership, but your shareholders agreement protects the business from disruptive ownership changes.

Here's a practical example:

Your will says: "I leave my 60% shareholding in Smith & Sons Ltd to my daughter Emily."

Your shareholders agreement says: "Upon death, remaining shareholders have first right to purchase deceased's shares at book value within 90 days. If declined, shares may pass to named beneficiary subject to board approval."

Together, these ensure Emily inherits your shares (will) but other shareholders can buy them if Emily doesn't want to run the business (shareholders agreement).

Pre-emption rights in shareholders agreements give existing shareholders the first opportunity to purchase shares before they transfer externally. This prevents unwanted third parties becoming shareholders through inheritance.

Death and incapacity clauses can trigger automatic buy-back provisions. The company or remaining shareholders purchase your shares at a pre-agreed valuation, providing liquidity to your estate while protecting business continuity.

Valuation methods specified in the agreement avoid disputes. Common approaches include book value, multiple of earnings, or independent professional valuation. Without this, families fight in court over what shares are worth.

When is each document sufficient?

Will alone is sufficient for:

  • Sole proprietorships with no partners
  • Single-owner limited companies
  • Businesses with no other shareholders requiring coordination

Both will and shareholders agreement required for:

  • Multi-shareholder companies
  • Family businesses with some family involved and others not
  • Companies with external investors
  • Partnerships planning coordinated succession

For multi-shareholder businesses, trying to use a will without updating your shareholders agreement creates conflicting instructions. Your will might name your son as beneficiary, but the shareholders agreement might restrict transfers to family members. Get both documents working together.

The Two Types of Succession: Ownership vs Management

This distinction solves the most difficult family business succession dilemma: how to be fair to all your children when only one can run the company.

Ownership succession determines who gets the shares and profits. Management succession determines who makes business decisions and runs day-to-day operations.

These don't have to be the same people.

You can give all your children equal ownership while designating only the competent, interested child as managing director with operational authority. Everyone shares profits equally, but business decisions rest with the qualified successor.

Consider these structure options:

Voting vs non-voting shares: Give your business-involved child voting shares with control. Give other children non-voting shares with equal economic benefit but no operational authority.

Trust structures: Place shares in trust for children under 25 or those without business experience. Professional trustees manage voting rights while beneficiaries receive income.

Buy-out provisions: Structure the will so involved children can buy out uninvolved siblings over time from business profits. Everyone gets fair value without forcing immediate sales.

Fair doesn't mean equal when business operations are at stake.

David left his £1.5 million construction business equally to all four children. Only one worked in construction. The resulting shareholder disputes—should they expand or consolidate? Hire more staff or outsource?—forced a business sale 18 months later.

The sale price was £900,000, destroying £600,000 in value. The family relationships never recovered.

Compare this to the restaurant owner who left her business to daughter Claire, the chef and manager, but specified a £200,000 cash legacy to son James, an accountant with no restaurant interest. Claire got operational control. James got equivalent value. No ownership conflict, no forced negotiation.

Or the three siblings who inherited equal shares in their father's engineering firm. Only Tom had engineering experience. The will named Tom as managing director with final operational authority while all three shared profits equally. This balanced fairness with competence.

Income vs control is the key framework. Non-involved children can receive share of profits (income) without voting control (operations). This gives them financial benefit from their parent's legacy without the burden of running a business they're unqualified for.

The involved child gets decision-making authority their skills have earned. The uninvolved children get financial security their family relationship deserves. The business gets competent leadership it needs to survive.

Business Property Relief (BPR): The £1 Million Cap You Need to Know

Business Property Relief is inheritance tax relief for qualifying business property under the Inheritance Tax Act 1984 (Sections 103-114). It was introduced in 1976 to prevent families having to sell businesses to pay tax bills.

For qualifying trading businesses, BPR provides 100% relief on business value. For unlisted company shares, 100% relief. For certain business assets, 50% relief.

The critical qualification: you must have owned the business or business property for at least 2 years before death under Section 106. This 2-year rule also applies to lifetime gifts of business property.

But everything changes in April 2026.

The government's Autumn Budget 2024 announced major BPR reforms taking effect 6 April 2026. The key change: a £1 million cap on 100% relief.

From 6 April 2026, combined Business Property Relief and Agricultural Property Relief will receive 100% relief only up to £1 million per person. Assets beyond £1 million receive just 50% relief.

What does this mean in practice?

A £2 million business under old rules: £0 inheritance tax (100% BPR on full value).

The same £2 million business under 2026 rules:

  • First £1 million: £0 tax (100% BPR)
  • Next £1 million: £200,000 tax (50% BPR means 20% effective IHT rate)
  • Total IHT: £200,000

For a £2.8 million manufacturing business:

  • First £1 million: £0 tax (100% BPR)
  • Next £1.8 million: £360,000 tax (50% BPR)
  • Total IHT: £360,000

But if the business owner uses their spouse's allowance through proper planning (£1 million each equals £2 million combined):

  • First £2 million: £0 tax
  • Final £800,000: £160,000 tax
  • Total IHT: £160,000

That's £200,000 saved through using both spouses' allowances.

Not all business property qualifies for BPR. Investment businesses and property rental companies typically don't qualify. The business must be a trading operation, not just holding assets.

The 2026 reforms also change AIM shares. Business property relief for shares admitted to trading on recognised stock exchanges designated as "not listed" (such as AIM shares) reduces from 100% to 50% in all circumstances.

One positive change: the option to pay inheritance tax by equal annual instalments over 10 years interest-free extends to all property eligible for agricultural property relief or business property relief. This prevents forced sales to meet immediate tax bills.

The planning window is closing. These reforms apply to lifetime transfers made on or after 30 October 2024 if the donor dies on or after 6 April 2026.

How to Leave Your Business to One Child Without Causing Resentment

This is the conversation most business owners avoid. You have multiple children. Only one works in and understands the business. How do you structure succession without creating lifelong resentment?

Start by rejecting the fairness trap. Equal division isn't fair if it destroys business value or forces sales that eliminate jobs and legacy.

The key is equalizing through different assets, not forcing inappropriate shared ownership.

Strategy one: Give the business to the involved child, equivalent value in other assets to uninvolved children.

Estate worth £2 million total: £1.5 million business plus £500,000 other assets.

Poor approach: Give 50% business shares to each of two children. The involved child is frustrated by shared control. The uninvolved child is burdened with unwanted responsibility. Business decisions become impossible.

Better approach: Give 100% business to involved child (£1.5 million value). Give remaining £500,000 plus life insurance policy worth £1 million to other child. Both receive £1.5 million equivalent value. Business stays operational.

Strategy two: Purchase life insurance to fund cash legacies for non-business children.

If your estate is primarily the business with limited other assets, a life insurance policy creates the cash needed to equalize inheritances. The involved child inherits the business. The policy payout funds equivalent cash legacies to other children.

A £1 million life insurance policy might cost a 60-year-old business owner £3,000-£5,000 annually. That's manageable for a profitable business and solves the fairness problem permanently.

Strategy three: Structure a phased buyout where the business child purchases siblings' shares over time.

The will leaves equal shares to all children initially, but includes provisions allowing the involved child to buy out siblings at pre-agreed valuation over 5-10 years from business profits. Uninvolved children get full value without forcing immediate sale. Involved child gains full control gradually while business generates the capital.

Communication prevents resentment as much as structure does.

Draft a letter of wishes explaining your reasoning: "I'm leaving the business to Sarah not because I love her more, but because she's dedicated her career to it and has the skills to run it successfully. I'm leaving equivalent value to Michael through the house and life insurance so both of you receive fair inheritances. This decision is about business continuity, not favoritism."

Discuss plans with all children before death. Only 44% of family business owners have had this conversation. That statistic explains why the other 56% of families experience shock, anger, and legal disputes after the owner dies.

Surprises create resentment. Open communication before death allows everyone to ask questions, express concerns, and understand reasoning. It dramatically reduces post-death disputes.

Your uninvolved children may actually feel relieved they're not inheriting business responsibility they never wanted. Frame it as protecting them from unwanted burden, not excluding them from inheritance.

Protecting Your Business from Family Disputes After You're Gone

Preventing family disputes requires legal mechanisms built into your succession documents before you die. Once you're gone, your family needs clear rules, not vague hopes for cooperation.

Shareholders agreement dispute clauses specify what happens when shareholders disagree. Mandatory mediation before litigation prevents expensive court battles. Arbitration requirements give a neutral third party authority to resolve deadlocks. These mechanisms keep disputes private and contained.

Independent valuation provisions prevent the most common dispute: what the business is worth. Pre-agree whether you'll use book value, multiple of earnings, or independent professional valuer. Specify the exact methodology in writing.

Deadlock provisions address what happens when shareholders can't agree on major decisions. Options include forced buy-sell clauses (one shareholder offers a price, the other must either buy or sell at that price), shotgun clauses (similar mechanism forcing resolution), or appointing a trusted third party as tie-breaker.

A family constitution is a written document outlining family values, business philosophy, and succession principles. It's not legally binding like a will or shareholders agreement, but it creates moral authority and shared understanding.

The Johnson family bakery employed 25 people when the founder died without clear succession plans. His three children inherited equal shares but couldn't agree on expansion vs maintaining tradition. After two years of disputes costing £80,000 in legal fees, they sold the business to a chain.

Proper succession planning with a shareholders agreement and clear letter of wishes could have preserved both the business and family relationships.

Common dispute triggers to address in your planning:

Salary and dividend disagreements: Active family shareholders working in the business expect salaries. Inactive shareholders want maximum dividends. Your shareholders agreement should specify how these decisions are made.

Business strategy conflicts: Next generation may want different direction than what built the business. Clear provisions about voting rights and decision-making authority prevent paralysis.

Buy-out valuation disputes: When one family member wants to exit, disagreement over share value destroys relationships. Pre-agreed valuation methodology eliminates this fight.

Divorce and remarriage: When a shareholder divorces, shares can become part of settlement negotiations. Shareholders agreement should specify whether divorced spouses can become shareholders or shares must be repurchased.

Death without clear plans: The worst trigger. Everything else can be managed if you plan ahead.

Your protection checklist:

  • Updated shareholders agreement with death and succession provisions
  • Will clearly specifying who inherits business shares
  • Valuation methodology agreed in writing before death
  • Letter of wishes explaining succession reasoning
  • Family meeting discussing plans before finalization
  • Professional trustees for minor or inexperienced beneficiaries
  • Buy-sell insurance to fund buyouts if needed

Testamentary trusts can appoint professional trustees to manage shares for younger or inexperienced beneficiaries. The trustee makes voting decisions in the business's best interest while the beneficiary receives income. This prevents unqualified family members controlling operations while protecting their financial interests.

Common Succession Planning Mistakes (and How to Avoid Them)

Learning from others' failures is cheaper than creating your own.

Mistake 1: Procrastination—"I'll Sort It Later"

69% of owners have no plan, many citing "plenty of time." Then a health crisis hits and there's no time at all.

The 2-year BPR ownership requirement means waiting can forfeit tax relief. If you transfer business property within 2 years of death, it doesn't qualify under Section 106.

Solution: Start with a basic will now. Creating a will with WUHLD takes 15 minutes and costs £99.99. You can add complexity later with solicitor advice if your situation becomes more complex. But having basic protection beats perfect planning you never complete.

Mistake 2: Focusing Only on Tax, Ignoring Family Dynamics

Tax-optimal structures that create family conflict destroy more value than inheritance tax would have cost.

A father left his business to his eldest son to maximize BPR efficiency. He never discussed it with his daughters. The son got £1.8 million in business shares. The daughters got £200,000 cash each.

The legal challenge under the Inheritance Act tied up the estate for three years. The business nearly failed during the uncertainty. The family hasn't spoken in five years.

Solution: Balance tax efficiency with family fairness and communication. An inheritance tax bill you can calculate and plan for is better than family breakdown you can't repair.

Mistake 3: Outdated Documents

The business has evolved—new shareholders, structure changes, increased value. But the will was written 15 years ago when the company was worth £300,000, not £2.8 million.

Solution: Review your will every 3-5 years minimum. Update after major business changes like taking on partners, restructuring as a limited company, significant value increases, or children joining the business.

Mistake 4: Misaligned Documents

The will says one thing, the shareholders agreement says another. When documents contradict, expensive legal disputes determine which provisions apply.

Solution: Have the same solicitor review both documents together. Or use WUHLD's online will with clear business succession clauses that reference your shareholders agreement, then have a solicitor review the shareholders agreement for alignment.

Mistake 5: No Communication with Family

Surprises after death cause resentment and legal challenges. Adult children claim they were promised the business. Uninvolved children feel excluded and undervalued.

Solution: Hold a family meeting. Explain your reasoning. Document the discussion. Let everyone ask questions. You'll discover objections you can address while you're alive rather than leaving your family to fight after you're gone.

Mistake 6: Assuming BPR Will Handle Everything

Many investment activities and property businesses don't qualify for BPR. The business must be primarily trading, not holding assets.

Even qualifying businesses face the 2026 reforms capping relief at £1 million. A £3 million business that would have had £0 tax under old BPR rules will face £400,000 inheritance tax under new rules.

Solution: Calculate actual inheritance tax liability with 2026 rules. Don't assume 100% relief. Plan for the tax bill whether through life insurance, installment payments, or reducing business value through lifetime gifting.

Mistake 7: Ignoring Successor Readiness

85% of next-generation family members believe they're ready for business leadership, but only 39% of current owners agree.

Inheriting a business you're unprepared to run destroys the business and your confidence.

Solution: Structured training, phased transition, and mentorship period before full control. Your will can specify the involved child becomes managing director but reports to a board including experienced advisors for the first three years.

Mistake 8: Failing to Distinguish Ownership from Management

Giving all children equal shares when only one can run the business creates operational paralysis.

Solution: Use structures separating economic benefit from operational control. Non-involved children can receive share of profits without voting control. Involved children get decision-making authority their skills have earned.

When You Need a Solicitor (and When WUHLD's Online Will Is Enough)

Honest assessment of complexity thresholds helps you make the right choice.

WUHLD's online will is sufficient when:

  • You're sole owner of the business with no shareholders to coordinate with
  • Business structure is straightforward (standard limited company or sole proprietorship)
  • Business value under £1 million (within new BPR cap, minimal inheritance tax)
  • You're leaving the business to one clear successor or selling it before death
  • No complex trust structures needed for beneficiaries
  • Family relationships are cooperative with no anticipated disputes
  • You understand you can consult a solicitor later if circumstances change

For £99.99, you get a legally binding will that clearly names business beneficiaries and executors, plus a 12-page Testator Guide, Witness Guide, and Complete Asset Inventory document. The entire process takes 15 minutes online.

Compare this to £650+ and weeks of appointments for a high street solicitor to draft the same basic will.

You need a solicitor when:

  • Multiple shareholders requiring coordinated shareholders agreement updates
  • Business worth over £2 million (significant inheritance tax even with BPR)
  • Complex corporate structures like holding companies, subsidiaries, or international operations
  • Agricultural property requiring Agricultural Property Relief coordination with BPR
  • Discretionary trusts or complex trust structures for beneficiaries
  • Known family disputes or anticipated will challenges
  • Business succession involving employee ownership trusts or management buyouts
  • Special shares like voting vs non-voting shares or preference shares

Marcus owns a £750,000 carpentry business with no other shareholders. He's leaving it to his son who already works there as lead carpenter. A £99.99 WUHLD will clearly naming his son as business beneficiary provides complete legal protection. Simple, effective, done.

Compare this to Emma, whose £3.2 million packaging business has four family shareholders, three children with different involvement levels, and international suppliers. Emma needs a specialist solicitor for coordinated will, shareholders agreement, and trust structures. Cost: £4,500. Timeline: 2-3 months.

The hybrid approach many business owners use: create a basic WUHLD will NOW (protecting against intestacy immediately), then book a solicitor appointment for shareholders agreement and tax optimization LATER.

This prevents the dangerous "waiting for solicitor appointment" period when you have no protection at all. Your WUHLD will remains valid while you add complexity with professional advice.

Cost comparison:

  • WUHLD online will: £99.99 (covers basic business succession clauses, 15 minutes)
  • High street solicitor will: £650-£1,200 (basic business will, 4-6 weeks)
  • Specialist business succession solicitor: £2,500-£5,000+ (includes shareholders agreement review, tax planning, 2-3 months)

Don't let perfect planning prevent basic protection. A simple will today beats a comprehensive plan you never create.

Creating Your Business Succession Will: Next Steps

Turn research into action with this step-by-step approach.

Step 1: Document Your Current Business Structure

Gather information about legal entity type (sole proprietorship, partnership, limited company), ownership structure (percentage ownership, share classes, other shareholders), current market value (approximate is fine), and key business assets.

Download WUHLD's Complete Asset Inventory to organize this information systematically.

Step 2: Identify Your Succession Preferences

Answer these questions: Who should inherit business ownership? Who should run day-to-day operations? Are these the same people—if not, how will you structure separation? What about children or family not involved in the business?

Write down your initial answers. They'll evolve, but starting clarifies your thinking.

Step 3: Calculate Potential Inheritance Tax

Use this formula for the 2026 BPR reforms:

Business value minus £1 million (new BPR cap) equals taxable amount. Taxable amount multiplied by 50% (remaining BPR) equals amount subject to inheritance tax. That amount multiplied by 40% equals tax due.

Example: £2 million business equals (£2M minus £1M) multiplied by 50% multiplied by 40% equals £200,000 inheritance tax.

Remember to consider spouse's allowance (if married, £1 million each equals £2 million combined), other estate assets, and existing nil-rate band.

Step 4: Review Existing Shareholders Agreement

If you have one, check: Does it have death and succession provisions? Do provisions conflict with your will intentions? When was it last updated?

If no shareholders agreement exists, note this for solicitor consultation if you have multiple shareholders.

Step 5: Have Family Conversation

This is the hardest step and the most important. Explain your succession thinking to those affected. Address concerns and expectations. Document key points from the discussion.

Research shows this conversation dramatically reduces post-death disputes. Your family may surprise you—uninvolved children may feel relieved they're not inheriting business responsibility.

Step 6: Create or Update Your Will

If your situation is straightforward (sole owner, under £1 million value, one clear successor), use WUHLD's online will for £99.99 and 15 minutes.

If complex (multiple shareholders, over £2 million, anticipated disputes), book a solicitor for comprehensive succession planning at £2,500-£5,000.

Hybrid approach: WUHLD will now for immediate protection, solicitor later for optimization as your business grows.

Step 7: Set Review Schedule

Review your will every 3-5 years minimum. Update after business restructuring, divorce or remarriage, birth of children, significant value changes, or shareholder changes.

Set an annual calendar reminder. Business succession planning isn't a one-time task.

Timeline guidance if you're starting from scratch:

Week 1: Document business structure, have family conversation Week 2: Create basic will with WUHLD (if straightforward) or book solicitor consultation (if complex) Month 2-3: Review or create shareholders agreement with solicitor Month 6: Review and finalize all documents Annual: Schedule review dates going forward

The hardest part is starting. Begin today with step one.

Frequently Asked Questions About Family Business Succession

Q: What happens to my family business if I die without a will?

A: Without a will, intestacy rules determine who inherits your business shares or ownership. This could mean your business passes to relatives who aren't involved in running it, or gets divided among multiple family members without regard for business continuity. For the 4.8 million family businesses in the UK, this creates serious operational and financial risks.

Q: Can Business Property Relief (BPR) eliminate inheritance tax on my family business?

A: BPR can provide 100% or 50% relief on qualifying business assets, depending on the type. However, from April 2026, the government has capped 100% relief at £1 million combined for business and agricultural property. Beyond this threshold, you'll receive 50% relief, meaning potential inheritance tax at an effective 10% rate on excess value.

Q: Should I leave my business equally to all my children in my will?

A: Equal division isn't always fair or practical. If only one child is involved in running the business, giving equal shares to all children can create management conflicts and force a business sale. Many families distinguish between ownership succession (who owns shares) and management succession (who runs the business) through shareholders agreements and structured buy-out provisions.

Q: What's the difference between a will and a shareholders agreement for succession planning?

A: Your will determines who inherits your business shares when you die. A shareholders agreement governs how those shares can be transferred, who can buy them, at what price, and what happens if shareholders disagree. Both work together: your will transfers ownership, while the shareholders agreement protects business continuity by controlling how those shares operate within the company.

Q: How long before death must I own my business to qualify for Business Property Relief?

A: You must have owned the business or business property for at least 2 years before death for it to qualify as "relevant property" under Section 106 of the Inheritance Tax Act 1984. This 2-year rule also applies to lifetime gifts of business property for inheritance tax purposes.

Q: Can I update my will if family circumstances or business structure changes?

A: Yes, you should update your will whenever significant changes occur—such as a child joining or leaving the business, divorce, remarriage, business restructuring, or changes to company ownership. Regular reviews (every 3-5 years minimum) ensure your succession plan reflects current reality and the 2026 BPR reforms.

Q: What if my children don't want to take over the family business?

A: If no family members want to continue the business, your will can specify alternative succession plans: selling to management, employees, or external buyers, with proceeds distributed as you direct. Your will should include contingency provisions for this scenario, rather than forcing ownership on unwilling family members which often leads to business failure.

Conclusion

You've spent decades building your family business—protecting employees, serving customers, creating value for the next generation. But without a clear succession plan in your will, that legacy could be destroyed by intestacy rules, family disputes, or unnecessary tax bills.

The time to act isn't "someday." It's now, while you have the clarity and health to make these decisions thoughtfully.

Key takeaways:

  • 69% of UK family businesses lack succession plans—don't let yours join them
  • Your will determines WHO inherits your business, shareholders agreements determine HOW those shares operate
  • The April 2026 BPR reforms cap 100% relief at £1 million, creating potential tax bills for businesses above this threshold
  • Distinguish ownership succession from management succession—fair doesn't mean giving all children equal operational control
  • Most sole-owner businesses under £1 million can use a £99.99 WUHLD online will; complex structures need solicitor advice

Create your family business succession will today with WUHLD. For £99.99 (vs £650+ for a solicitor), you'll get a complete, legally binding will that clearly names business beneficiaries and executors, plus a 12-page Testator Guide, Witness Guide, and Complete Asset Inventory document.

The entire process takes just 15 minutes online, and you can preview your will free before paying anything—no credit card required.

Preview Your Business Succession Will Free – No Payment Required

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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