What Happens to My Business When I Die? A Guide for UK Business Owners

If you run your own business, it is probably one of the most valuable things you own — and one of the most vulnerable. Many business owners have carefully planned for growth, cash flow and staff, but have never asked a simple question: what happens to the business if I die, or if I can no longer make decisions?

These are some of the questions business owners across London and Surrey ask me most often. Here are the answers, in plain English.

If I Die, What Happens to My Business?

The answer depends on how your business is set up:

Sole Traders

If you are a sole trader, you and your business are legally the same thing. When you die, the business itself usually ends. Its assets — equipment, stock, money owed by customers, the business bank account — become part of your estate and are passed on under your will, or under the intestacy rules if you have no will. Your executors may be able to sell the business or its assets, but they will need clear authority and information to do so.

Partnerships

If you are in a partnership, a great deal depends on your partnership agreement. A good agreement sets out what happens when a partner dies: whether the business continues, how your share is valued, and how your family is paid out. Without an agreement, the default legal rules can mean the partnership comes to an end on the death of a partner, which can be very disruptive for the surviving partners and for your family.

Limited Companies

A limited company is a separate legal entity, so it does not die with you. It carries on existing. What passes to your family is your shareholding — and the question of who actually runs the company becomes the urgent one.

If I Die, What Happens to My Limited Company?

The company continues, but day-to-day problems can arise very quickly, especially if you are the only director:

• Nobody may have the authority to sign contracts, pay staff or suppliers, or operate the company's bank account
• The bank may freeze or restrict the account until a new director is in place
• Customers and staff may lose confidence while the situation is unclear

For many companies using the standard articles of association, the personal representatives of a sole shareholder can appoint a new director. But they first need the legal authority to act for your estate, which takes time. Practical steps that help include appointing a second director, having a shareholders' agreement that deals with death, and leaving clear instructions about who should step in.

Who Inherits My Company Shares When I Die?

Your shares form part of your estate and normally pass under your will. However, your will is not the only document that matters:

• Articles of association may restrict who can hold shares, or give other shareholders the first option to buy them
• A shareholders' agreement may require your shares to be offered to the remaining shareholders at a set valuation
• Cross-option agreements, often funded by life insurance, can let the surviving shareholders buy your shares and give your family cash instead

It is important that your will and your company documents say the same thing. If your will leaves your shares to your children but the company's articles give the other shareholders the right to buy them, the result may not be what you intended.

Inheritance tax is another consideration. Qualifying business shares can benefit from Business Relief, which reduces the inheritance tax due. The rules changed in April 2026, including a limit on how much business property can receive full relief, so larger businesses may now face some tax. Your accountant can tell you how this applies to your business, and your will can then be structured to make the most of any relief available.

Can I Leave My Business to My Children in My Will?

Yes, and many business owners want to. But it is worth thinking carefully about how to do it fairly and practically:

• Not every child may want to run the business. A common approach is to leave the business to the child who works in it, and other assets to your other children to balance things out.
• Young children cannot run a company. If your children are under 18, the shares can be held in a trust, with trustees managing them until the children are old enough.
• Who runs it in the meantime? Your will can name executors and trustees who understand business, rather than leaving everything to family members who may not.
• Blended families need extra thought. If you have children from more than one relationship, our guide to wills for blended families covers how to keep things fair.

What Happens to My Business If I Cannot Make Decisions?

Losing mental capacity, even temporarily after an accident or illness, can be more damaging to a business than death, because there is often nobody with the authority to step in.

Under the standard articles used by many companies, a director can stop being a director if a doctor confirms they are unable to act. If you are the sole director, the company may then have nobody able to sign anything. And as a shareholder, nobody can use your votes to appoint a new director unless you have given someone the legal power to do so.

For sole traders, the position is even simpler and starker: without a Lasting Power of Attorney, nobody can access the business bank account, pay suppliers or keep the business running.

Do I Need a Lasting Power of Attorney for My Business?

If you own a business, a Lasting Power of Attorney is one of the most important documents you can have. Many business owners make two separate Property and Financial Affairs LPAs:

• A business LPA, appointing someone with business experience — perhaps a fellow director or trusted colleague — to deal with your business interests
• A personal LPA, appointing family members to manage your personal finances and home

This keeps business decisions with people who understand the business, while your family looks after your personal affairs. An attorney cannot simply take over your role as a director, but they can use your shareholder votes, for example to appoint a new director so the company can keep trading. It is also worth checking your company's articles of association and any shareholders' agreement, so that your LPA works alongside them.

A Simple Checklist for Business Owners

1. Make or update your will so it deals clearly with your business or shares
2. Check your articles of association, shareholders' agreement or partnership agreement say the same thing as your will
3. Consider appointing a second director if you are currently the only one
4. Make a Lasting Power of Attorney, possibly a separate one for your business
5. Speak to your accountant about Business Relief and inheritance tax
6. Leave clear notes on passwords, key contacts and how the business runs

How Abrahams Wills Can Help

I help business owners across Kingston, Richmond, Chiswick, Ealing and throughout London and Surrey put wills and Lasting Powers of Attorney in place that protect both their business and their family. I work alongside your accountant where needed, so that your will and your business arrangements fit together.

As a member of The Society of Will Writers, with over 25 years of legal experience, I explain everything in plain English. A single will starts from £150, and Lasting Powers of Attorney from £75 when added to a will, with no hidden fees. I visit clients 7 days a week, daytime or evening — including at your business premises if that is easier.