If you have not made a will before your death, the intestacy rules dictate who inherits any shares that you own.
This means that your company shares could be controlled by a trust, or go to a relative whom you had no intention should inherit the shares. If you leave your company shares to minor children, then they will have to be sold, unless special provisions are included in the will.
What are the intestacy rules?
If there is a surviving spouse/civil partner who survives by 28 days, the spouse inherits the first £450,000 and half the balance over £450,000; the other half will go to parents, or if they are dead, to siblings.
If you have a spouse and children, the spouse inherits the first £250,000, personal possessions, and income arising on half of the remainder above £250,000. The other half of the remainder goes to the children in equal shares.
If you have no children, parents or siblings, then half-siblings or even aunts and uncles inherit your estate. Failing that, then your estate passes to the crown.
Of course you may not care that your hard-earned wealth goes to the government to ease the deficit, but it may be that you prefer other people to benefit. Certainly your co-shareholders might wish to have some certainty, particularly if there are only a few shareholders.
How to avoid the intestacy rules
By making a will, you are taking out insurance that your wishes are followed after your death, to avoid complications and disputes for those you leave behind. By seeking advice you will also find out how to save inheritance tax.
If you would like to know more about the issues covered in this article, Vardags offers a free consultation to qualifying individuals.
For high net worth and ultra high net worth individuals or their companies, our confidential enquiry line is staffed 24 hours. Call 020 7404 9390 today.