The short answer
If you own a business, a standard will is rarely the whole succession plan. Your will deals with your estate interest, but company constitutions, shareholder or partnership agreements, management arrangements, tax reliefs and funding can determine whether the intended transfer actually works.
Start with what you actually own
A sole trader, partner and shareholder do not own the same thing. Before deciding who should inherit “the business”, identify whether the estate will contain business assets, a partnership interest, company shares, loans to the company or another interest.
The legal structure matters because a will cannot simply override contractual transfer restrictions or company and partnership rules.
Ownership and management are different questions
The person who inherits an ownership interest may not be the person best placed to run the business day to day. Succession planning should therefore ask both:
- Who should ultimately own the value?
- Who can keep the business operating while the estate is being administered?
A capable executor is useful, but an executor is not automatically a replacement managing director or operating partner.
Review the business documents alongside the will
Depending on the structure, review the constitution, shareholders' agreement, partnership agreement, buy-sell provisions, pre-emption rights, insurance arrangements and any personal guarantees. A will that conflicts with those documents can create delay or an outcome different from what the owner expected.
Equal shares are not always a workable succession plan
Where one child works in the business and others do not, simply dividing the ownership equally can create commercial and family tension. One possible plan is to leave control or the business interest to the active successor while providing other estate value elsewhere, but the valuation and fairness of that structure need careful advice.
What is CAT Business Relief?
Revenue's Business Relief can reduce the taxable value of qualifying relevant business property by 90%. The relief is condition-based. Revenue defines categories of relevant business property and imposes ownership and retention requirements; certain assets or businesses do not qualify.
For gifts and inheritances taken after 1 January 2024, relief can be withdrawn in circumstances including the business ceasing to trade or qualifying property being disposed of within the relevant six-year period, subject to Revenue's replacement-property and other rules.
An IT38 return is required when claiming Business Relief even where the normal 80%-of-threshold filing test would not otherwise require one.
Liquidity matters
A valuable business can leave an estate rich on paper but short of cash. Consider how estate liabilities, tax, other beneficiaries and any buyout of co-owners will be funded without forcing a damaging sale.
Questions an owner should answer now
- What exactly do I own?
- Who can run the business immediately after my death?
- Do business agreements restrict a transfer to my chosen beneficiary?
- What is the business realistically worth?
- Does the intended beneficiary qualify for Business Relief?
- How will other beneficiaries be treated?
- Is there enough cash or insurance to support the plan?
- Do my will, business agreements and tax plan all point to the same outcome?
Is a MakeAWILL.ie template suitable?
Our downloadable templates are for straightforward personal estates. They are not business-succession documents. If a business is a material part of your estate, use a solicitor and tax adviser who can review the ownership structure and business documents before the will is finalised.
Official Revenue references
- Revenue: relevant business property
- Revenue: 90% Business Relief calculation
- Revenue: withdrawal of Business Relief
Important: This is general information, not company, legal or tax advice. Business succession is a strong case for bespoke professional planning.
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