Sole Traders and Wills: Protecting Your Business

Mark ran a successful web design business from home, bringing in £65,000 a year. At 42, with an unmarried partner and two children, he kept meaning to write a will. When he died suddenly from a heart attack, his business accounts were frozen within hours. His partner couldn't access the £18,000 in the business account to pay the mortgage or his three freelancers' invoices.

Under intestacy rules, his partner of 11 years inherited nothing—everything went to his children, who were minors. His executor had to close the thriving business because no one could legally operate it during the six-month probate process, losing £45,000 in annual client contracts.

Mark's story isn't unusual. Of the UK's 3.1 million sole proprietorships, most operate without proper estate planning, not realizing that when a sole trader dies, the business dies too—and everything freezes until probate is granted.

If you're a sole trader, your business isn't a separate legal entity. It's you. And without a will, the consequences for your family and your business legacy can be devastating. Sole trader planning intersects with asset protection strategies, unmarried couples inheritance rights, and fair estate distribution for families dependent on business income.

What Is a Sole Trader and Why Your Will Matters

A sole trader is the simplest UK business structure where you and your business are one legal entity. Unlike a limited company, there's no separation between personal and business finances. This means all business assets and debts are yours personally, and when you die, the business legally ceases to exist.

At the start of 2024, the UK had 3.1 million sole proprietorships—56% of all UK businesses. Of these, 2.9 million employ no one aside from the owner. This makes sole trading the most common business structure in the UK.

The critical legal distinction is this: when you die, your business cannot continue operating. All business assets—equipment, inventory, client lists, intellectual property, accounts receivable—become part of your personal estate. All business debts become personal estate debts that must be paid before distribution to beneficiaries.

Without a will, intestacy rules determine who gets everything. And those rules don't consider business continuity, client relationships, or preserving the value you've spent years building. For comprehensive protection, sole traders should understand inheritance tax planning and lifetime gifting strategies that apply to business succession.

What Happens When a Sole Trader Dies Without a Will

The moment of death triggers a cascade of devastating consequences for your business.

All bank accounts freeze as soon as banks are notified. Partners, employees, and suppliers cannot be paid during probate, which typically takes 6 to 12 months. Business operations halt immediately—there's no legal authority for anyone to continue trading.

Intestacy rules apply with brutal efficiency. Unmarried partners inherit nothing, regardless of years together or business involvement. Consider Sarah, who worked alongside her partner Tom for 15 years building a graphic design business worth £85,000. When Tom died without a will, Sarah—despite contributing £30,000 from her savings—had no automatic legal claim to any business assets.

If children inherit but are minors, executors hold assets in trust, complicating business disposal. Debts get paid first: business creditors, HMRC, suppliers all take priority before family sees anything.

The value loss is staggering. Viable businesses often must be closed or sold at drastically reduced prices because frozen accounts and lost momentum destroy goodwill. A £100,000 annual turnover business might realize only £20,000 if sold under probate pressure.

Client contracts terminate without someone legally authorized to fulfill obligations. Within weeks, your carefully built reputation and client base are gone.

How Intestacy Rules Affect Sole Trader Business Assets

Sole trader business assets are personal assets—UK law makes no distinction. The intestacy hierarchy applies with unforgiving clarity.

The complete order is: children and grandchildren → parents → siblings → nephews and nieces → aunts and uncles → cousins. Notice who's missing? Unmarried partners have zero automatic inheritance rights under intestacy, regardless of how long you've lived together.

The timeline compounds the problem. Partners must wait until the estate is distributed, often 6 to 12 months minimum, while business accounts remain frozen. There's a possible remedy—cohabiting partners can make a claim under the Inheritance (Provision for Family and Dependants) Act 1975 if they've lived together for 2+ years.

But the reality is harsh. Court claims cost £5,000 to £15,000 or more, outcomes are uncertain and stressful, and they must be filed within six months of the grant of representation. Even if successful, cohabiting partners only receive "maintenance provision"—a lower standard than spouses receive. This is precisely why proper will planning for unmarried couples is critical when business assets are involved.

Meanwhile, ongoing liabilities accumulate. Rent, insurance, subscriptions continue accruing while the estate is frozen. Business value evaporates day by day.

Emma discovered this when her partner James died. They'd run a successful carpentry business together for eight years. Despite being named on equipment financing and having invested £40,000 of her inheritance, Emma had no automatic claim when James died intestate. His adult children from a previous marriage inherited everything—and had no interest in continuing the business. Emma lost her livelihood and her investment.

Bank Account Freezing and Business Continuity Crisis

The moment banks learn of your death, all accounts freeze—typically within 24 to 48 hours. Business and personal accounts are treated identically. There's no special consideration for "business needs."

No payments can be made. Employee wages, supplier invoices, rent, utilities—everything stops. No payments can be received either. Customers cannot pay outstanding invoices into frozen accounts.

There's an alternative: customers may pay into a new executor account, but this requires setting up during probate—adding complexity and delay. Accounts remain frozen until the Grant of Probate is issued, averaging six months but often taking 12 months or more.

If you employ staff, they cannot be paid without access to accounts. Employees who've worked for you for two years or more are entitled to statutory redundancy payments, plus any unpaid salary, holiday, or notice pay. But where does this money come from when accounts are frozen?

The domino effect is swift and merciless. Unpaid suppliers may pursue the estate. Unpaid employees may have employment claims. Ongoing client work cannot be completed or billed. Monthly retainers terminate as clients move to competitors.

After six months of business inactivity, goodwill evaporates. Clients don't wait for probate to complete—they find new suppliers and never return.

David's IT consulting business had £6,500 in the business account and £4,200 in monthly expenses when he died unexpectedly. Within weeks, his reputation with corporate clients was destroyed. The business that had taken seven years to build was worthless within three months of frozen accounts.

Inheritance Tax and Business Property Relief for Sole Traders

Currently, sole trader businesses qualify for 100% Business Property Relief (BPR) from inheritance tax—but critical changes are coming.

To qualify, you must have owned the business for 2+ years, and the business must be actively trading (not investment or property rental). BPR applies to the business as a whole—not individual assets like premises or equipment considered separately.

Standard inheritance tax is 40% on estates above £325,000 (or £500,000 with the residence nil-rate band for those leaving property to direct descendants).

But from 6 April 2026, everything changes.

The government has capped BPR at £1 million per person. The first £1 million gets 100% relief—anything above that gets only 50% relief, creating an effective 20% tax rate on the excess.

Here's what this means in practice: A sole trader business worth £1.5 million in 2027 receives £1 million tax-free. The remaining £500,000 gets only 50% relief, leaving £250,000 taxable at 40%—a £100,000 inheritance tax bill.

For a £2 million business: £1 million is tax-free, £1 million gets 50% relief (£500,000 taxable at 40%), resulting in £200,000 inheritance tax due.

This makes will planning urgent for sole traders with businesses approaching £1 million valuation. Married couples can potentially shield £2 million by each utilizing their £1 million allowance through careful estate planning.

Importantly, this £1 million allowance operates on a seven-year rolling basis, not as a lifetime cap. This means you can make periodic gifts of qualifying assets up to £1 million every seven years without permanently using up your allowance.

Without a will specifying how to handle business assets and tax planning, executors have severely limited options to minimize tax liability.

What to Include in Your Sole Trader Will

Your will needs specific provisions that ordinary wills might not address.

Executor choice matters enormously. Consider appointing someone with business acumen, or name your accountant as co-executor. Why? Executors will need to value the business, manage creditors, potentially continue trading temporarily to preserve value, or sell as a going concern. These require commercial judgment, not just administrative competence.

Business asset distribution requires careful thought. Most sole traders choose the residuary estate approach—"all my business assets and personal estate to [beneficiary]." This is simpler and more flexible than creating specific business gifts.

Only separate your business assets if you want them given to a different beneficiary than your other assets. For example, leaving business assets to a business partner while personal assets go to family.

Guardian provisions become critical when you have children. Appoint guardians who understand that your business may need to be sold to provide for the children financially. The guardian and the executor (who controls the money) might not be the same person—this requires coordination.

Create a business information side letter listing key details: accountant contacts, major clients and their contract terms, supplier relationships, intellectual property details, software licenses, pending invoices. This isn't part of your will, but it helps executors preserve business value during the transition.

Authorize debt settlement. Include explicit authority for executors to settle business debts promptly to preserve business value and relationships. Delayed payments destroy supplier goodwill and business reputation.

Consider trading continuation authority. Some wills include provisions allowing executors to continue the business temporarily to maximize sale value. This is particularly valuable if the business can operate for a few months while a buyer is found, rather than immediate closure.

Clear beneficiary designation is essential for unmarried partners. Explicitly name them as beneficiaries—don't rely on assumptions or intestacy. Specify percentages if you're dividing assets between partner and children.

Alternative beneficiaries answer the question: what happens if your primary beneficiary dies before you? Without this, partial intestacy may apply to their share.

Why Sole Traders Should Consider Lasting Power of Attorney Too

A will only takes effect at death. But what if you become incapacitated from an accident, stroke, or serious illness?

A Lasting Power of Attorney (LPA) for Property and Financial Affairs allows your appointed person to manage your business during incapacity. Without an LPA, family must apply to the Court of Protection for deputyship—costing £3,000 to £10,000 or more and taking 6 to 12 months.

With an LPA in place, your attorney can immediately pay bills, manage accounts, and keep the business running or wind it down in an orderly fashion.

Consider Michael, a sole trader who had a serious car accident and was in a coma for four months. Without an LPA, his business accounts were frozen, and the business collapsed. His partner watched helplessly as seven years of work evaporated—she had no legal authority to act.

Compare this to Sophie's situation. When she suffered a severe stroke, her LPA allowed her business partner to continue operating their consultancy business, preserving income and client relationships during her six-month recovery.

A will and LPA together provide comprehensive protection—covering both death and incapacity. WUHLD focuses on wills, but sole traders should consider LPAs as part of holistic planning. You can obtain official LPA forms from gov.uk or through legal services.

Alternative Business Structures: Should You Incorporate?

Some sole traders exploring succession planning consider whether a limited company structure might offer better protection.

As a separate legal entity, a company continues after a director or shareholder dies. Shares can be transferred via will, so company operations need not cease. This offers succession flexibility—you can gift shares during your lifetime or transfer them to family members incrementally.

For families with multiple members involved in the business, each can utilize their own £1 million BPR allowance if shares are distributed among them. This potentially shields far more value from inheritance tax than a sole trader structure allows.

The trade-offs are real, though. Limited companies bring more complex administration, higher accounting costs, Corporation Tax obligations, and Companies House filing requirements.

Incorporation isn't right for everyone. Sole traders with simpler businesses may not benefit from the added complexity. This article focuses on will planning for those remaining as sole traders, not company structure advice.

When should you consider incorporating? If your business is approaching £1 million in value, if multiple family members could become shareholders, or if you have complex succession plans involving gradual transition to the next generation.

Always consult your accountant or business solicitor about optimal structure before making changes. The tax, legal, and administrative implications depend entirely on your specific circumstances. Regardless of structure, you need a will—but company structure does offer more continuity options.

How WUHLD Helps Sole Traders Protect Their Business for £49.99

WUHLD's online will service is designed for straightforward estates—including most sole trader businesses.

Complete your will in 15 minutes. Simple online questions guide you through the entire process. You'll answer questions about your business assets, choose executors, name beneficiaries, and appoint guardians if you have children—all in one streamlined session.

£49.99 one-time payment—no subscriptions, no hidden costs. Compare this to £650+ average solicitor fees for a basic will. You get the same legal protection at a fraction of the cost.

You receive four essential documents: Your legally binding will, a 12-page estate planning guide, executor guidance explaining how to handle business assets, and an asset documentation checklist to organize your affairs.

Preview before paying. See your complete will before providing payment details. This ensures it covers your needs and protects your business properly. No credit card required to preview.

Business asset coverage is built in. WUHLD specifically asks about business ownership and structures provisions accordingly. Your business assets are clearly identified and distributed according to your wishes.

Executor guidance included. Your chosen executors receive clear instructions on handling business assets, managing frozen accounts, and preserving business value during probate.

Protects unmarried partners explicitly. Name your partner as beneficiary—don't rely on intestacy rules that give them nothing. The will makes your intentions legally binding.

Covers guardianship in the same document. If you have children, appoint guardians alongside business asset distribution. Everything is handled in one comprehensive will.

Legally valid across the UK. WUHLD wills meet all requirements of the Wills Act 1837 and subsequent amendments. They're recognized by probate registries throughout England, Wales, Scotland, and Northern Ireland.

When might you need a solicitor instead? Very complex situations including: multiple business entities, international assets, disabled beneficiary trusts requiring specialist drafting, tax planning for estates substantially above the £1 million BPR threshold, or concerns about contested estates requiring additional legal safeguards.

For most sole traders with straightforward business structures, WUHLD provides comprehensive protection at a fraction of solicitor costs.

Start today with a free preview. In 15 minutes, you'll see exactly what protection you're getting—with no obligation and no payment required until you're completely satisfied.

Frequently Asked Questions

Q: What happens to a sole trader business when the owner dies?

A: When a sole trader dies, the business legally ceases to exist immediately. All business accounts freeze until probate is granted (typically 6-12 months), operations cannot continue, and business assets become part of the personal estate to be distributed according to the will or intestacy rules.

Q: Can my unmarried partner inherit my sole trader business?

A: Not automatically. Unmarried partners have no inheritance rights under UK intestacy rules, regardless of how long you've lived together. You must explicitly name them as a beneficiary in your will to ensure they inherit any part of your business.

Q: Does Business Property Relief apply to sole trader businesses?

A: Yes, sole trader businesses can qualify for 100% Business Property Relief if actively trading and owned for 2+ years. However, from 6 April 2026, relief is capped at £1 million—excess value receives only 50% relief, creating a 20% effective tax rate on amounts above £1 million.

Q: How much does a will cost for a sole trader?

A: Solicitor fees for sole trader wills typically start at £650 and can exceed £1,500 for complex estates. WUHLD provides a complete, legally valid will for £49.99 one-time payment, suitable for straightforward sole trader estates. You can preview your entire will free before paying.

Q: Do I need a solicitor for a sole trader will or can I use an online service?

A: Most sole traders with straightforward business structures can use online will services like WUHLD. You may need a solicitor for very complex situations: estates substantially above £1 million requiring sophisticated tax planning, multiple business entities, international assets, or disabled beneficiary trusts.

Q: What happens to my business debts when I die as a sole trader?

A: Business debts become personal estate debts. They must be paid from your estate before beneficiaries receive anything. If debts exceed assets, your estate is insolvent, and beneficiaries inherit nothing—but they're not personally liable for business debts beyond the estate value.

Protect Your Business Legacy Today

Key takeaways:

Your sole trader business legally dies when you do—it's not a separate entity that continues operating
Without a will, intestacy rules apply: unmarried partners inherit nothing, accounts freeze for 6+ months, and business value evaporates during probate
Business Property Relief changes from April 2026 mean estates above £1 million face new inheritance tax—making will-based planning urgent for valuable businesses
Your will should appoint business-savvy executors, explicitly name beneficiaries (especially unmarried partners), and authorize handling of business debts and assets
WUHLD's £49.99 online will takes 15 minutes and provides complete protection for straightforward sole trader estates

You built your business from nothing. You've poured years of work, late nights, and personal risk into creating something valuable. Don't let poor planning destroy in months what took years to build—or leave your family fighting over frozen accounts while your legacy crumbles.

WUHLD makes protecting your business simple and affordable. Create a legally valid UK will in just 15 minutes for a one-time payment of £49.99—no subscriptions, no hidden fees, no expensive solicitor appointments.

Ready to Create Your Will?

WUHLD makes it simple to create a legally valid will online in just 15 minutes. Our guided process ensures your wishes are properly documented and your loved ones are protected.

Start creating your will now — it's quick, affordable, and backed by legal experts.

Legal Disclaimer: This article provides general information about sole trader wills and estate planning and does not constitute legal advice. For advice specific to your individual situation, please consult a qualified solicitor. WUHLD's online will service is suitable for straightforward UK estates; complex situations involving substantial business assets, international holdings, or sophisticated tax planning may require professional legal advice.

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