What Happens to Your Business When You Die?

David built his digital marketing agency from his spare bedroom to a £450,000-turnover business with seven employees over twelve years. When he died of a sudden heart attack at 43, his business bank accounts froze immediately. His team couldn't access funds to pay themselves, invoice clients, or cover the office rent due in three days.

His wife Sarah discovered she had no legal authority to run the business—David was the sole director, and his shares were stuck in probate. Without a succession plan, the business that supported eight families collapsed within six weeks.

David's story isn't unusual. Among UK's 5.5 million private sector businesses, 69% of family business owners have no succession plan, and only 32% have an up-to-date will. Without proper business succession planning, the business you spent years building could die with you. The consequences vary dramatically depending on how your business is legally structured—but without proper planning, the business you spent years building could die with you.

This article explains exactly what happens to different business structures when the owner dies, the legal and practical consequences, and how to protect your business, employees, and family with proper succession planning.

How Business Structure Determines What Happens When You Die

The answer to "what happens to my business if I die" depends entirely on one critical factor: your legal business structure.

The UK's 5.5 million private sector businesses break down into distinct legal structures, each with completely different consequences when the owner dies. At the start of 2024, 56% were sole proprietorships (3.1 million), 38% were actively trading companies (2.1 million), and 6% were ordinary partnerships (356,000).

Your business structure determines whether your business has legal personality separate from you as an individual. This seemingly technical distinction has profound real-world consequences.

For sole traders, you and your business are legally the same person—when you die, the business dies with you. For limited companies, the company is a separate legal entity that continues to exist, but directorship terminates and shares must be transmitted through your estate. For partnerships, the default rule is automatic dissolution unless your partnership agreement says otherwise.

Quick reference: What happens to your business structure when you die

Sole trader: Business legally dies with you, accounts freeze, assets become part of your estate
Limited company: Company continues as legal entity, directorship terminates, shares pass via your will
Partnership: Automatically dissolves under Partnership Act 1890 unless partnership agreement overrides this
LLP: Continues as legal entity, membership terminates, member's interest passes via your will

Without proper succession planning, default legal rules apply—and these default rules were often designed for different eras and different business models. They rarely produce the outcome you'd want for your business, your employees, or your family.

What Happens When a Sole Trader Dies

When a sole trader dies, the business legally dies at the same moment.

This isn't a metaphor or simplification—it's the precise legal reality. As a sole trader, you and your business are the same legal person. Your business has no separate existence. When you cease to exist, so does your business.

The immediate consequence is that business bank accounts freeze once the bank is notified of your death. Your employees can't be paid. Suppliers can't be paid. Customers can't be served. No one has legal authority to operate the business.

Maria ran a café in Manchester with three employees. She'd built the business over eight years, with loyal customers and reliable suppliers. When she died unexpectedly at 51, the business bank account froze within 24 hours.

Her daughter wanted to keep the café running—the staff knew the operations, customers were asking when they'd reopen, and there was enough cash flow to be viable. But she couldn't access any funds until probate was granted. That took five months. The rent went unpaid. The staff found other jobs. Suppliers moved on to other customers. By the time the executor finally got access to the account, there was no business left to continue.

Your executors have very limited authority before probate is granted. They can pay funeral expenses and inheritance tax. That's essentially it. They cannot pay employees, settle supplier invoices, honour customer commitments, or make any business decisions.

Probate typically takes 3-6 months minimum, often longer for complex estates. During this entire period, your business is frozen.

All business assets become part of your personal estate with no legal distinction between "business money" and "personal money." Your £80,000 business bank balance sits alongside your £15,000 personal savings account—all frozen, all inaccessible until probate is granted, all subject to the same estate distribution rules.

If you have business debts, those must be paid from your estate before any inheritance is distributed. Your family doesn't automatically inherit "the business minus the debts"—the executor must value all assets, pay all debts, and only then distribute what remains according to your will or intestacy rules.

For business assets that could theoretically continue generating income—client contracts, intellectual property, equipment—the practical reality is that few executors have the business knowledge, legal authority, or time to actually continue trading. Most sole trader businesses effectively cease trading the day the owner dies.

One potential lifeline exists: if your will specifically authorizes your executor to continue trading the business, and your executor is willing and capable of doing so, the business might continue during probate. But this is rare. Most executors understandably don't want the liability of running a business they didn't build, in an industry they may not understand, while also managing probate and their own lives.

There is one piece of good news for sole traders: qualifying business assets may receive 100% Business Property Relief from inheritance tax if you've owned them for at least two years. This means your business assets could pass to your beneficiaries tax-free, though this is changing from April 2026 (we'll cover that in detail later).

If you're a sole trader, you absolutely must have a will that names an executor with business knowledge and explicitly addresses what should happen to your business assets. Without this, your business will almost certainly die with you, even if it could have survived.

What Happens When a Limited Company Director Dies

When a limited company director dies, the company doesn't die—but that doesn't mean business continues as normal.

This is the critical distinction many business owners miss: your limited company is a separate legal entity. It continues to exist after your death. But your directorship terminates immediately, and your shares must be transmitted through your estate.

Tom ran a construction company with an annual turnover of £800,000. He was the sole director and sole shareholder. When he died on a Monday morning, payroll was due Friday. The company had plenty of money in the bank to pay the team, but no one had legal authority to approve the payment.

Tom's company didn't cease to exist—it still existed as a legal entity. But it couldn't function because there was no director to make decisions, sign documents, or authorize transactions.

Under the Companies Act 2006, directorship terminates automatically upon death. Companies House must be notified within 14 days via form TM01. This isn't optional—it's a legal requirement.

Meanwhile, your shares pass to your personal representative (your executor) through a process called "transmission." Your executor doesn't automatically become a director—they become the shareholder. Being a shareholder and being a director are completely different roles with different powers.

Here's where many companies hit a potentially catastrophic problem: who appoints the new director?

If your company was incorporated after October 2009, it probably adopted the Companies Act 2006 Model Articles. These include a provision allowing personal representatives to appoint directors. That's good news—your executor can appoint themselves or someone else as director, and the company can continue operating.

But if your company was incorporated before October 2009, it might still be operating under the Companies Act 1985 Table A articles. These older articles often don't include a mechanism for personal representatives to appoint directors without a quorum of existing directors. If you were the sole director, there's no quorum. You've created a legal deadlock.

The company continues to exist, potentially with valuable contracts, assets, and goodwill, but it can't actually do anything. It can't approve transactions, sign contracts, pay suppliers, or make business decisions. It's legally alive but practically paralyzed.

Emma and Jack were 50-50 shareholders in a recruitment agency. Emma died suddenly at 48. Her shares passed to her husband Mark via her will. Mark had no interest in the recruitment business and no knowledge of the industry. But as a 50% shareholder, he now had equal voting rights with Jack on all major business decisions.

Jack couldn't buy Mark out immediately—the shares were tied up in Emma's estate. Mark didn't want to be involved but also didn't want to give up a potentially valuable asset without proper valuation. The business that Emma and Jack had built together ground to a halt as the two men tried to navigate an impossible situation neither had planned for.

Your Articles of Association override your will in many respects. They may contain pre-emption rights that restrict who can own shares. They may contain forced sale provisions that require shares to be offered to other shareholders at a specified price. They may prevent your family from actually benefiting from the shares you left them.

Many business owners have never read their Articles of Association. They don't know whether they're operating under Model Articles or Table A. They don't know what happens to their shares when they die. They assume "it'll be fine"—until it's catastrophically not fine.

A Business Lasting Power of Attorney can provide some protection by allowing a trusted person to make business decisions if you lose mental capacity, but it only covers incapacity, not death.

If you own a limited company, three actions are essential: verify which Articles of Association your company operates under (you can check with Companies House), ensure there's a mechanism for personal representatives to appoint directors, and consider whether you need a shareholders' agreement that addresses death and succession.

What Happens When a Business Partner Dies

When a partner in a traditional partnership dies, the default legal rule is shocking: the partnership automatically dissolves.

This isn't what "might" happen or what "could" happen. Under Section 33(1) of the Partnership Act 1890, "every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner" unless the partnership agreement specifically says otherwise.

Automatic dissolution means the business must wind up. Assets must be sold. Debts must be paid. Any surplus must be distributed among the partners' estates. The business stops trading.

Emma and Jack were equal partners in a recruitment agency with £600,000 annual turnover. They'd worked together for eight years, built strong client relationships, and employed four people. They never got around to drafting a partnership agreement—they trusted each other and figured their "understanding" was enough.

When Jack died suddenly at 45, the partnership automatically dissolved that day under the Partnership Act 1890. Emma had no legal right to continue the business. Jack's share passed to his estate and would eventually go to his wife and children, but it was a share of the wound-up business, not the ongoing concern.

Emma couldn't legally continue trading under the partnership. She couldn't access partnership bank accounts without the executor's agreement. She couldn't sign new contracts or make commitments on behalf of a partnership that no longer legally existed. The business she'd spent eight years building was legally dead, even though she was standing there alive and willing to continue it.

Surviving partners have no automatic right to continue the business or to buy out the deceased partner's share. Everything must be negotiated with the executor, who has a legal duty to maximize value for the estate—not to accommodate the surviving partners' wishes.

The Partnership Act 1890 is 135 years old. It was designed for a different era. Its default rules make sense for some scenarios but are catastrophic for most modern business partnerships. Yet these default rules still apply to every partnership in England and Wales unless explicitly overridden by a written partnership agreement.

A properly drafted partnership agreement should include a continuation clause stating that the partnership continues despite a partner's death, a valuation mechanism for calculating the deceased partner's share, buyout terms specifying how and when the surviving partners will pay for that share, and a funding source (usually life insurance policies on each partner's life).

Cross-option agreements are commonly used alongside partnership agreements. These give the surviving partners an option to buy the deceased partner's share and give the deceased partner's estate an option to require the surviving partners to buy. Whichever party exercises their option first triggers the buyout.

Rachel and two partners ran a software consultancy. Each partner took out a £250,000 life insurance policy with the other partners as beneficiaries. They also had a partnership agreement with a continuation clause and a cross-option agreement. When Rachel died at 52, the insurance paid out £250,000, the surviving partners used that money to buy Rachel's share from her estate, and the business continued without interruption. Rachel's family received £250,000 in cash rather than a forced share in a wound-up business.

Limited Liability Partnerships (LLPs) work differently. Under Section 4(3) of the Limited Liability Partnerships Act 2000, the death of a member doesn't automatically dissolve the LLP. The LLP continues as a legal entity, similar to a limited company. But you still need a members' agreement addressing what happens to the deceased member's interest and who takes over their management responsibilities.

If you're in a partnership without a written partnership agreement, this is urgent. The default rules are not your friend. Even if you trust your partners completely, the Partnership Act 1890 doesn't care about trust—it requires formal legal agreements to override its dissolution provisions.

The Immediate Practical Crisis: Bank Accounts, Payroll, and Operations

Beyond the legal structure issues, every business owner who dies creates an immediate practical crisis: frozen bank accounts.

When a bank is notified of an account holder's death, the account freezes until legal authority (probate) is demonstrated. This applies to all business accounts—current accounts, savings accounts, credit facilities.

The timing is often cruel. Death doesn't wait for the convenient moment after payroll is processed and rent is paid. It comes on random Tuesday mornings when rent is due Friday and payroll is due next week.

Rachel's father built a manufacturing business over 30 years. When he died suddenly, Rachel—the operations director—discovered £85,000 in wages was due in 48 hours. The money existed in the company account. The company had the funds. But the account was frozen, and Rachel had no authority to access it.

She called the bank. They sympathized but explained they needed probate or letters of administration before releasing any funds. She explained that 30 employees were facing missed mortgage payments. The bank couldn't help. She asked about emergency executor powers. The bank said to consult a solicitor.

Rachel spent three frantic days arranging emergency personal loans and contributions from family members to cover payroll while they figured out the legal situation. Several employees still left for more secure jobs. The business survived but was permanently damaged.

Your executors cannot access frozen accounts before probate is granted. There are very limited exceptions—executors can pay funeral expenses and inheritance tax from the estate. That's essentially it.

Employees cannot be paid. Suppliers cannot be paid. Rent cannot be paid. HMRC deadlines for PAYE, VAT, and Corporation Tax don't pause for your death—they continue ticking, and penalties accrue if obligations aren't met.

Statutory obligations continue regardless of the business owner's death. If your company is required to file accounts with Companies House, that deadline doesn't change. If VAT returns are due, they're still due. The law doesn't care that no one can access the accounts.

Customers and suppliers don't wait around. If you had major contracts with key person clauses (clauses that allow termination if a specific person dies), those contracts may terminate automatically. Even without such clauses, customers facing uncertainty often take their business elsewhere.

Some business owners think joint accounts solve this problem. They add their spouse or business partner as a joint account holder so that person can access funds if they die. This can work for personal accounts but creates complications for business accounts—joint account holders have equal legal ownership of all funds, which may not reflect the actual business ownership structure.

Authorized signatories (people authorized to sign on behalf of the business) don't help if the sole director dies—without a director to authorize transactions, the company can't legally function regardless of who has signing authority on the account.

Business credit cards with additional cardholders provide limited operational continuity—the additional cardholder can still make purchases after the primary cardholder dies, at least until the card issuer is notified. But this is a stopgap, not a solution.

The real solution is succession planning that addresses both ownership transfer (who inherits the business) and operational continuity (who runs the business tomorrow if you die today). These are two separate problems requiring two separate solutions.

Most business owners focus on the eventual ownership question and completely ignore the immediate operational crisis. That's a mistake. The immediate crisis can destroy the business long before ownership is ever resolved.

Intestacy and Business Ownership: The Unexpected Inheritance Problem

If a business owner dies without a will, the intestacy rules apply—and these rules can destroy businesses by creating chaotic ownership structures.

UK intestacy rules don't distinguish between business assets and personal assets. Everything is treated the same—your £300,000 business, your £20,000 car, your £5,000 savings account are all just "the estate."

Under current intestacy rules in England and Wales, if you're married or in a civil partnership with children. Without a will, business owners face chaos, your spouse receives all personal possessions, the first £322,000 of the estate, and half of everything above that amount. Your children inherit the other half of everything above £322,000, split equally between them.

For sole traders, this often means the business must be sold to create liquidity for distribution. You can't give half a café to your spouse and split the other half among three children. The business gets valued, sold, and the proceeds distributed according to intestacy rules.

For limited companies, your shares are distributed according to intestacy rules. Your spouse might receive the first £322,000 worth of shares, and your children inherit the remainder. You've just created a shareholding structure with your spouse and multiple children as shareholders—a structure you would never have chosen and that makes effective business management nearly impossible.

James ran a successful £400,000 sole trader marketing consultancy. He lived with his partner Lisa for 12 years. They never married—they didn't see the need, and James kept meaning to make a will but never got around to it.

When James died intestate at 49, Lisa discovered she had no legal claim to anything. Unmarried partners inherit nothing under intestacy rules. Despite helping build the business over 12 years, despite being James's life partner and assumed heir, Lisa was legally a stranger.

James's entire estate, including the business assets, went to his elderly parents. They had no understanding of the marketing business and no relationship with James's clients. They instructed the executor to wind up the business and distribute the proceeds. Lisa lost both her partner and her livelihood in one devastating blow.

Cohabiting partners are common in the business world. Many business owners live in long-term relationships without formal marriage. They assume their partner will inherit. They're wrong. Intestacy rules don't recognize unmarried partners at all, regardless of how long you've lived together or whether you have children together.

The intestacy process also takes longer than probate with a will. When there's no will, the court must appoint an administrator rather than simply granting probate to the named executor. This involves additional court steps and typically adds weeks or months to an already slow process.

If beneficiaries under intestacy rules include children under 18, their inheritance is held in trust until they turn 18. For business assets, this creates years of complicated trust administration and makes business decisions nearly impossible.

Business partnerships create particularly dangerous intestacy scenarios. Your partnership share passes to your statutory beneficiaries under intestacy rules. The surviving partners may suddenly find themselves in business with your spouse, your elderly parents, or your teenage children—none of whom chose to be business partners and most of whom have no relevant business knowledge.

Limited company shares under intestacy pass to multiple beneficiaries who become shareholders whether they want to be or not. A thriving family business with clean ownership structure suddenly has fractured shareholdings among people with different interests, different levels of business knowledge, and potentially conflicting goals.

Intestacy also prevents strategic use of tax reliefs. Business Property Relief can provide 100% inheritance tax relief on qualifying business assets, but only if your estate is structured correctly. Intestacy creates statutory distribution that may not optimize tax treatment. Strategic use of spousal exemption (transfers between spouses are IHT-free) also requires a will—intestacy may distribute assets in ways that create unnecessary tax liability.

Among UK family business owners, only 32% have an up-to-date will. That means the majority are risking intestacy. For business owners, intestacy is worse than for ordinary individuals—business succession simply cannot be left to default statutory rules designed for simple personal estates.

Business Property Relief and Inheritance Tax: Protecting Your Business from the Tax Bill

Many business assets qualify for 100% inheritance tax relief under Business Property Relief—but only if you understand the rules and plan correctly.

Business Property Relief (BPR) is one of the most valuable tax reliefs available to UK business owners. It can mean the difference between your family inheriting your business intact or being forced to sell it to pay a six-figure inheritance tax bill.

Currently, qualifying business assets receive 100% relief from inheritance tax if you've owned them for at least two years before death. Understanding inheritance tax planning is critical for business owners. This applies to sole trader business assets, partnership shares, and shares in unlisted trading companies.

Sarah owns a manufacturing business worth £2 million. Under current rules, if she dies tomorrow (having owned the business for more than two years), her business assets qualify for 100% BPR. Her estate pays £0 inheritance tax on the business. Her family inherits the full £2 million business value.

But from April 6, 2026, these rules change dramatically.

The Autumn 2024 Budget announced major changes to Business Property Relief. From April 2026, 100% relief will only apply to the first £1 million of qualifying business assets. Assets above £1 million will only receive 50% relief—meaning an effective 20% inheritance tax rate on the excess.

Under the new post-April 2026 rules, Sarah's £2 million manufacturing business would get 100% relief on the first £1 million (£0 tax) and 50% relief on the second £1 million. That second million would face 40% inheritance tax on the unrelieved 50%, which equals £200,000. Her family would face a £200,000 tax bill, potentially requiring a business sale or significant borrowing to pay HMRC.

Not all businesses qualify for Business Property Relief. The business must be a trading business—businesses mainly dealing in land, shares, securities, or making or holding investments typically don't qualify.

This means most property rental businesses don't qualify for BPR (they're investment businesses, not trading businesses). Investment holding companies don't qualify. Businesses that mainly buy and sell shares don't qualify. The "wholly or mainly trading" test is complex and fact-specific.

You must own qualifying business assets for at least two years before death. If you buy a business or start a new business and die within two years, your estate gets no Business Property Relief, regardless of the business's trading nature or value.

Binding contracts to sell can destroy Business Property Relief. If your shareholders' agreement includes a binding obligation to sell shares on death, HMRC may argue the shares don't qualify for relief because they're subject to a binding contract for sale. This technical trap catches many business owners who thought they'd planned carefully.

Strategic planning opportunities exist before April 2026. Some business owners are considering lifetime gifts of business assets (though the seven-year rule for inheritance tax applies to gifts). Others are reviewing business structures to optimize use of the £1 million threshold. Many are ensuring their businesses clearly qualify as "trading" to avoid HMRC challenges.

The interaction with spousal exemption creates planning opportunities. Transfers to spouses are always IHT-free (no limit), so business owners married to their business partner can use spousal exemption fully, though this just defers tax until the surviving spouse dies.

HMRC challenges business valuations regularly. When you claim BPR, you're telling HMRC "my business is worth £X and qualifies for relief." HMRC may disagree with the valuation or with the qualification. Having professional valuations from qualified business valuers provides crucial evidence if challenged.

Business Property Relief is powerful but complex. The April 2026 changes make planning more urgent for businesses worth over £1 million. For specific tax planning advice, consult a qualified tax advisor or accountant who specializes in business succession.

Creating a Business Succession Plan That Actually Works

Succession planning requires addressing two separate challenges: ownership transfer (who inherits or buys your business) and operational continuity (who runs the business tomorrow if you die today).

Most business owners focus exclusively on ownership and completely ignore operations. This is backwards. Operational continuity comes first—if the business collapses in the six months before probate is granted, ownership of a dead business is worthless.

Ownership transfer determines who ultimately inherits your business assets, partnership share, or company shares. This happens through your will (or intestacy rules if you have no will), shareholders' agreements, partnership agreements, and cross-option agreements.

Operational continuity determines who has legal authority to run the business immediately after your death. This requires appointed alternate directors, authorized signatories, documented business processes, and clear instructions for executors.

Your succession planning checklist depends on your business structure:

For sole traders:

Create a will naming an executor with business knowledge and authority to either continue trading during probate or wind down the business in an orderly way
Document all business processes, customer relationships, supplier contracts, and access to systems
List all business assets for estate planning purposes
Decide whether the business should continue after your death (and if so, who would run it) or be wound down
Consider whether Business Property Relief applies to your business assets
Ensure your will explicitly authorizes executor to continue trading if that's your intention

For limited companies:

Verify which Articles of Association your company operates under (check Companies House records)
If you have pre-2009 Table A articles, consider adopting Model Articles or adding provisions for personal representatives to appoint directors
If you have multiple shareholders, create or review your shareholders' agreement to address death, incapacity, valuation mechanisms, and buyout provisions
Consider cross-option agreements funded by shareholder protection life insurance
Appoint at least one additional director so you're not the sole director (avoids the quorum deadlock)
Create a Business Lasting Power of Attorney for incapacity planning
Document who should become directors if you die and ensure your Articles allow this
Review any binding sale obligations in shareholders' agreements that might affect Business Property Relief

For partnerships:

Verify you have a written partnership agreement (if not, get one drafted immediately—this is urgent)
Ensure partnership agreement includes a continuation clause stating the partnership continues despite a partner's death
Include a clear valuation mechanism for calculating a deceased partner's share
Specify buyout terms (how and when surviving partners will purchase the deceased partner's share)
Consider partnership protection life insurance on each partner's life to fund buyouts
Create cross-option agreements giving both sides the right to trigger a buyout
Document business operations so surviving partners can continue without you
Ensure your personal will addresses what happens to your partnership share (even though partnership agreement controls business aspects)

For LLPs:

Create or review your members' agreement to address death and incapacity of members
Specify who takes over management responsibilities if a member dies
Include buyout provisions and valuation mechanisms
Consider life insurance to fund member buyouts
Document operational knowledge and processes

Life insurance plays a crucial role in succession funding. Shareholder protection insurance and partnership protection insurance provide cash to buy out a deceased owner's share, allowing the business to continue while the family receives cash rather than forced business ownership.

Michael, Sarah, and James owned equal shares in a software company. Each took out £300,000 life insurance policies with the other shareholders as beneficiaries. They had a shareholders' agreement with a cross-option agreement. When Michael died at 46, the £600,000 insurance payout allowed Sarah and James to buy Michael's shares from his estate. The business continued smoothly, and Michael's family received £300,000 in cash rather than being stuck with minority shares in a business they knew nothing about.

Documentation is critical. What happens to the business shouldn't exist only in your head. Document critical processes, key customer and supplier relationships, system access passwords and credentials, financial account details, and who knows what about the business.

Communication matters. Tell key people about your plan—your spouse or partner, business partners or co-shareholders, your solicitor and accountant, your executor, and potentially key employees who would need to step up if you died.

Review your succession plan every 2-3 years or after major changes (new business partners, significant growth, marriage or divorce, birth of children, changes in tax law, major changes to business structure or assets).

When you need professional advice: partnerships always need specialist legal advice for partnership agreements, businesses with multiple shareholders need shareholders' agreements, businesses valued over £500k should get professional tax and legal advice, complex ownership structures require specialist input, and family succession (passing business to next generation) needs careful legal and tax planning.

For sole traders with straightforward estates, creating a will that properly addresses business assets versus personal assets is the essential first step. For complex business structures, professional advice from solicitors specializing in business succession is critical.

The Human Cost: Employees, Customers, and Legacy

Your business supports more people than you realize—and they all depend on your planning.

Every employee has a family. Every supplier has their own business to run. Every customer has needs that your business meets. When you die without succession planning, you don't just affect your family—you affect dozens or hundreds of people who depend on what you've built.

Tom employed 15 people in his manufacturing business. When he died without a succession plan, the business couldn't continue. Payroll couldn't be processed. Within three weeks, all 15 employees had to find new jobs to pay their mortgages and feed their families.

Those 15 employees represent 15 families—perhaps 40 or 50 people total whose lives changed because Tom didn't plan. The local supplier who'd worked with Tom for 12 years lost a major customer. The businesses that bought Tom's products had to scramble to find alternative suppliers. The ripple effects touched hundreds of people.

Job security vanishes overnight when a business owner dies without planning. Employees often can't be paid for months while probate proceeds. Even if the business could survive, employees can't wait three to six months without income. They're forced to find new employment even though their jobs might have been saved with proper planning.

Customer relationships built over years or decades disappear. Clients who trusted you specifically have no reason to trust a business in chaos with no clear leadership. Those relationships often represent the business's most valuable asset—and they evaporate in weeks without succession planning.

Long-term supplier relationships are destroyed when the business can't pay invoices due to frozen accounts. Suppliers who extended favorable terms based on years of reliable payment suddenly face unpaid invoices and no way to collect until probate completes.

Research shows 60% of family businesses fail in transition to the second generation, and 90% fail by the third generation. These aren't just statistics—they represent family legacies lost, employment opportunities destroyed, and community businesses that vanished.

For family businesses, succession is about more than money. It's about preserving what previous generations built. It's about creating opportunity for the next generation. It's about family heritage and values embodied in how the business operates.

Rebecca's grandfather started a printing business in 1965. Her father expanded it in the 1990s. When her father died with a clear succession plan, Rebecca—who'd worked in the business for 15 years—became managing director smoothly. The business that employed 23 people continued. Family heritage survived. Employees kept their jobs. The business that had served the community for nearly 60 years lived on.

That's the positive scenario. The business you built can outlive you. It can continue supporting employees and their families. It can preserve what you spent decades creating. Your legacy can live on.

But only if you plan for it.

Your responsibility as a business owner extends beyond your family. When you employ people, you take on responsibility for their livelihoods. When you build supplier relationships, people come to depend on your business's stability. When you serve customers, they rely on you.

Succession planning isn't just about protecting your interests—it's about protecting everyone who depends on what you've built.

Taking Action: Your Next Steps as a Business Owner

You know what could go wrong. Now here's exactly what to do about it, organized by urgency and business structure.

Immediate actions (do this week):

Check your business structure. Confirm whether you're a sole trader, partnership, limited company, or LLP. If you're not certain, check your business registration, tax status, and Companies House records if applicable.

Locate key documents. Find your Articles of Association (for limited companies), partnership agreement (for partnerships), and shareholders' agreement (for companies with multiple shareholders). If you can't find these documents or they don't exist, that's critical information—write down what's missing.

Check your will status. Do you have a will? When was it last updated? Does it specifically address your business assets? If you don't have a will or haven't reviewed it since starting your business, this needs immediate attention.

Identify who would run your business tomorrow. If you died today, who has legal authority to make business decisions? Who knows how to operate the business? Is that person legally empowered to access accounts and sign documents? Write down the honest answers.

Short-term actions (do this month):

If you're a sole trader: create or update your will to name an executor with business knowledge. List all business assets (equipment, inventory, intellectual property, customer contracts, supplier relationships) for estate planning. Decide whether your business can or should continue after your death, and if so, document who would run it and how. Ensure your will explicitly authorizes your executor to continue trading if that's your intention. Consider Business Property Relief and whether your business qualifies.

If you own a limited company (including startup founders): verify which Articles of Association your company operates under (particularly important for companies incorporated before 2009). Check how shares would be transmitted on death and who could appoint replacement directors. If you're the sole director, appoint at least one additional director or ensure your Articles allow your personal representative to appoint directors. If you have multiple shareholders and no shareholders' agreement, consult a solicitor about whether you need one.

If you're a partnership: verify a written partnership agreement exists and review it (if you have no written agreement, getting one drafted is genuinely urgent—the Partnership Act 1890 default rules are dangerous). Confirm the agreement includes continuation provisions, valuation mechanisms, and buyout terms. If no agreement exists or yours doesn't address these issues, book an appointment with a solicitor who specializes in partnership law. Get quotes for partnership protection life insurance.

Document critical business information. Create a document listing key customer and supplier contacts, important contracts and their renewal dates, all financial accounts and where to find access information, business systems and passwords, and key processes that only you currently know.

Medium-term actions (do this quarter):

Get a professional business valuation. You need to know what your business is worth for estate planning, buyout provisions in agreements, insurance coverage calculations, and inheritance tax planning.

Review life insurance coverage. Do you have enough cover to fund buyouts if you die? Could your family maintain their lifestyle if the business dies with you? Shareholder protection and partnership protection insurance should match your business valuation.

Consider a Business Lasting Power of Attorney. This allows someone you trust to make business decisions if you lose mental capacity (though it doesn't help after death—you need a will for that).

Have the difficult conversation. Talk to your business partners about what happens if one of you dies. Discuss succession planning with family members who might inherit the business. Tell your executor what you expect them to do with your business. These conversations are uncomfortable but essential.

Review beneficiary designations on pension policies, life insurance policies, and any other financial products that pass outside your will.

Starting with a will:

For sole traders and business owners with straightforward estates, creating a will that properly addresses business assets is the essential foundation.

WUHLD makes it easy and affordable to create a legally valid will online in just 15 minutes. You can preview your complete will free before paying anything—no credit card required.

For £49.99 (compared to £650+ for a solicitor will), you get your complete legally binding will, a 12-page Testator Guide explaining how to execute your will properly, a Witness Guide to give to your witnesses, and a Complete Asset Inventory document to help you list business and personal assets.

For partnerships, businesses with multiple shareholders, businesses valued over £500k, or complex ownership structures, you'll likely need specialist solicitor advice beyond basic will creation. But creating your will with WUHLD gives you a solid foundation and helps you understand what questions to ask when you do consult a solicitor.

The business you've built deserves protection. The people who depend on it—your family, your employees, your customers—deserve the security that comes from proper planning.## Frequently Asked Questions

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

A: The sole trader business legally dies with the owner because they are the same legal person. Business bank accounts freeze immediately when the bank is notified, and executors typically cannot access funds until probate is granted (3-6 months minimum). All business assets become part of the personal estate.

Q: Does a limited company automatically close when the director dies?

A: No, the limited company continues as a separate legal entity. However, directorship terminates immediately upon death, and whether the business can continue depends on the company's Articles of Association and who has authority to appoint a replacement director. Companies with pre-2006 Table A articles often face deadlock issues.

Q: What happens to a partnership if one partner dies?

A: Under the Partnership Act 1890, the partnership automatically dissolves when any partner dies unless the partnership agreement specifically overrides this default rule. Dissolution means the business must wind up, sell assets, pay debts, and distribute surplus—surviving partners have no automatic right to continue the business.

Q: Do I need a will if I own a business?

A: Yes, even more urgently than non-business owners. Without a will, intestacy rules apply to your business assets, potentially creating chaotic ownership structures, forcing business sales, or leaving business partners stuck with your family members as unwilling co-owners. Business succession cannot be left to default legal rules.

Q: What is Business Property Relief and how does it affect inheritance tax?

A: Business Property Relief provides 100% inheritance tax relief on qualifying business assets (sole trader businesses, partnership shares, unlisted company shares) held for 2+ years. From April 6, 2026, this changes to 100% relief on the first £1 million only, with 50% relief above that (effective 20% IHT rate on excess value).

Q: Can my spouse automatically take over my business if I die?

A: It depends entirely on your business structure. For sole traders, business assets pass via your will or intestacy rules but the business itself legally dies. For limited companies, shares can pass to your spouse via your will, but they don't automatically become a director. For partnerships, automatic dissolution applies unless your partnership agreement says otherwise.

Q: What happens to my business bank account when I die?

A: Business bank accounts freeze when the bank is notified of death. Executors cannot access frozen accounts until probate is granted, which typically takes 3-6 months minimum. During this period, the business cannot pay employees, suppliers, or other obligations (except funeral expenses and inheritance tax in limited circumstances).

Q: How long does it take for executors to get access to business accounts?

A: Probate typically takes 3-6 months minimum for straightforward estates, often longer for complex situations or if contested. During this entire period, business accounts remain frozen. If there's no will, the process takes even longer because the court must appoint an administrator.

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Legal Disclaimer: This article provides general information about what happens to different business structures when the owner dies and does not constitute legal, tax, or financial advice. Business succession law is complex and depends on your specific business structure, agreements, and circumstances. Partnership agreements, Articles of Association, and shareholders' agreements are complex legal documents that override standard will provisions. For advice tailored to your individual situation, please consult a qualified solicitor specializing in business succession planning. Tax implications, particularly regarding Business Property Relief, are complex and subject to change—consult a qualified tax advisor for advice specific to your business. WUHLD's online will service (£49.99) is suitable for straightforward UK estates, including sole traders with standard business assets. Complex business situations—including partnerships, multiple shareholders, businesses valued over £500k, or family succession disputes—require specialist legal advice beyond basic will creation.

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