When it comes it comes to running a small business, one important thing that can be often overlooked is the need to have a will that is up-to-date. Of course this isn’t something you want to have to think about but it is one of the matters that come with owning assets in your name. In the Philippines, 6.2% of the adult population are established business owners and 18.4% are engaged in early-stage entrepreneurship. With such a high population, this is a staggering amount of people that it effects.
Typically, people see getting older or developing an illness as the correct time to start thinking about writing a will but this is not the case as more often than not in life, unfortunate surprises can pop up. In addition, you shouldn’t feel like you’re bound to the first will you write either as you will need to update your will as your business progresses and the things in your life do too. This refers to changes in circumstances such as updating it if you get married, enter a civil partnership or have children.
It is vital that you don’t overlook the smaller things and fall prey to the excuse of ‘I’ll do it later’. To give you some examples of why you need to take this more seriously, we’ve put together 3 of the reasons why you need consider writing a will as a small business owner.
Make Sure Your Assets Are Spread Equally
A common assumption is that when you pass away your assets will be logically divided up amongst your loved ones and that will be the end of it. Unfortunately, this is not the case. Swedish book author Stieg Larsson died in 2004 without having his will witnessed and his partner of 32 years received nothing from his estate. Larsson’s family granted his wife ownership of the home she had lived in with Larsson but she did not receive anything from the tens of millions he earned from his worldwide book sales and the subsequent film adaptation. You may be thinking this was a Swede and not a Philippine and furthermore, that as a small business owner you obviously won’t be dealing with this sum of money however, you need to get into the right business habits and organise yourself correctly from day one. By making sure your assets are correctly distributed in your will, this ensures protection for your family. You don’t want to disregard it as an unneeded job to find down the line that you’ve left your family in a similar situation.
Prevent Issues with Future Ownership
As your small business is likely to be an owner-dependent business, it is not unheard of for this type of business to fail following the death of the owner. The common reason for this is because a successor is not named. It is unlikely a lot of thought would be put in to who is capable of running your business apart from yourself, and this results in the remaining parties with an interest in your business being left fighting for the scraps. If your will only acts to name a successor, it will help your business to continue should you pass away.
This can also be important if you employ one or more of your children in your business and pass away. There is a chance the business will be split between all of your children; regardless of whether they currently work in the business. This can be seen as unfair by the children that have worked for the business and can lead to unnecessary conflict between your children. As the one who works in the business may have to buy out the other siblings in order to take control.
General Piece of Mind
Entrepreneurship is highly encouraged in the Philippines through the activities of the different government departments, such as the Department of Trade and Industry, the Department of Science and Technology, Bangko Sentral ng Pilipinas and the Commission on Higher Education. The Government offer training and advice to entrepreneurs throughout every stage of their business career however, will’s aren’t something that are being massively pushed on Filipino owners, which is a worry thought considering how important they are.
It isn’t a pleasant thing to think about, but if you want to make sure your family and business are taken care of should the worst happen, you need to plan ahead. Will disputes are a costly and often drawn-out process that can easily be avoided. Losing a loved one is hard enough without the added pressure of looking at dispute resolution solicitors to solve the problem with a will. As mentioned, it can also create unnecessary conflict between siblings and wider family members at a time when families should be sticking together for support.