Key takeaways
Shares may not pass as expected
Company documents can override inheritance assumptions.
Business relief rules have changed
More business assets may face inheritance tax.
Succession planning protects business continuity
Regular reviews reduce tax, ownership and control risks.
Most business owners have a will.
Far fewer know what would happen to their company shares if they died tomorrow.
That's where problems can arise.
Many people assume their shares will automatically pass to their spouse or children. The position is often more complicated, particularly in a family business, owner-managed business or private limited company.
It's not just about your will
When a shareholder dies, their shares will usually form part of their estate and pass under their will or, where there is no will, under intestacy rules.
However, your will is only part of the story.
The company's Articles of Association and any Shareholders' Agreement can have a significant impact on what happens next.
These documents may:
restrict who can inherit shares
require shares to be offered to existing shareholders first
give surviving shareholders a right to buy the shares
specify how the shares should be valued
set out succession arrangements following a shareholder's death.
This means the person inheriting the value of the shares may not necessarily become a shareholder in the way they expected.
What happens immediately after death?
A deceased shareholder's executors or administrators will usually be responsible for dealing with the shares during the estate administration process.
Depending on the company's requirements, a Grant of Probate may be needed before the shares can be transferred or certain shareholder rights exercised.
For businesses with a small number of shareholders, this period can create uncertainty around ownership, control and decision-making.
The Inheritance Tax trap
One of the biggest issues for business owners is Inheritance Tax (IHT).
For many years, business owners relied on Business Relief to pass company shares to the next generation with little or no Inheritance Tax liability. However, the rules have changed.
Since 6 April 2026, a £2.5 million allowance applies to qualifying Business Relief and Agricultural Property Relief assets. In broad terms, qualifying assets above that threshold receive relief at 50% rather than 100%, meaning some business assets may now be exposed to Inheritance Tax where they previously were not.
As a result, many business owners are reviewing their estate planning, business succession planning and Inheritance Tax strategies to ensure their family and business are protected.
Why succession planning matters
The death of a shareholder can have a significant impact on a business.
Without proper planning, businesses can face:
ownership disputes
uncertainty over control and voting rights
family disagreements
business continuity issues
unexpected Inheritance Tax liabilities
delays in decision-making.
For family businesses in particular, succession planning is not just about passing on wealth. It is about protecting the future of the business itself.
Is your business prepared?
Business owners should regularly review:
their will
their Articles of Association
any Shareholders' Agreement
business succession arrangements
Inheritance Tax planning
shareholder protection and buy-back provisions.
At Hill Dickinson, our Succession Planning, Wills, Trusts and Estates, Corporate and Tax teams work closely with business owners, families and executors to advise on business succession planning, Inheritance Tax, Business Relief, estate planning, probate and the transfer of private company shares. Contact us today to discuss how we can support you with succession planning.
A regular review today could help avoid costly problems tomorrow.
