Why Both Spouses Should Be Involved in the Family Business

family business spouses

I was recently asked a really good question by a client. This husband and wife couple had been running their company together for many years. The husband started the business, and over time his wife became more and more involved, eventually taking on the admin and day-to-day running.

At the start, some alphabet shares were issued to the wife, but she wasn’t formally a director. We suggested she take on an equal ownership share now so that, if anything happened to her husband, she could continue to run the business and access the company’s funds.

It’s a situation I see quite often – and it raises some important points for any couple running a family business.

1. Make Both Spouses Directors

In many companies, only one spouse is listed as a director. If that person dies or becomes unwell, the other may not be able to legally make decisions or deal with banks, HMRC, or suppliers. By appointing both as directors, you remove this risk and ensure the business can continue without disruption.

 

2. Review the Shareholding

Ownership matters. If all the shares are in one spouse’s name, the other doesn’t truly have a legal stake in the business until those shares are inherited – and that can take time, especially if there’s no Will. By splitting shares equally, both partners become full owners with the same rights and protection.

See our blog on alphabet shares here

3. Don’t Forget Wills

Shares in a company are an asset just like property or savings. Without a Will, shares will pass under intestacy rules, which may not reflect your wishes. A properly written Will makes sure shares and other assets go to the right person smoothly.

See HMRC guidance on making a will here.

4. Put a Shareholders’ Agreement in Place

Even if you’re married, a shareholders’ agreement can be helpful. It sets out what happens if one partner dies, becomes unwell, or wants to step back from the business. This removes uncertainty and can prevent disputes at difficult times.

 

5. Check Bank Signatories

One of the most practical – but often overlooked – points. If only one spouse is a bank signatory, the other may not be able to access the business account if something happens. Ensuring both are signatories is a simple way to keep things running smoothly.

 

6. Consider Life Insurance

For many families, the business is the main source of household income. A life insurance policy linked to the business can provide a financial cushion if the unexpected happens, giving the surviving spouse breathing space and options.

 

7. Share Practical Knowledge

Running a business isn’t just about paperwork – it’s also about the practical details. Do both spouses know the HMRC and accounting software logins? Do you both know who the main suppliers and clients are? Making sure this knowledge is shared avoids nasty surprises.

 

Peace of Mind for the Future

This client couple aren’t alone – lots of family businesses start with one partner and gradually become a joint effort. But unless the legal and practical arrangements are updated, the business can be vulnerable if something unexpected happens.

The good news is that none of these steps are complicated – appointing directors, adjusting shareholdings, updating Wills, and checking bank mandates can all be done fairly quickly. Putting them in place now ensures the business, and the family who depend on it, are protected for the future.