While there’s no need to be morbid about it, it’s safe to say that none of us are going to make it out of here alive. Despite remarkable advances in technology and medicine, it might still take a while before we discover the key to an everlasting life.
Until then, it’s always best to have your affairs in order before your time comes. This includes making sure that you leave behind a personal will detailing how your belongings will be distributed after death. But what if you’re a business owner who’s put a significant amount of time and effort into building something special? In that case, you’ll probably want to make sure that the path you set on will be continued even after your personal journey has ended.
It bares mentioning that absolutely everything you leave behind will be considered as part of your estate. There are two main situations in such cases, depending on what your role in the company had been prior to death.
Sole Traders
If you were the sole trader of your business, it will then fall into the hands of the personal representatives of your estate. Unless specified otherwise, these representatives are established through the “rules of intestacy”, thus making the deceased person’s spouse and children the primary heirs by default. Of course, the interests of all these beneficiaries may not line up perfectly against each other, and they may differ greatly when compared to what you had in mind about your company. That’s why in many cases when a business will isn’t drafted, the assets belonging to the dead owner are quickly sold off by relatives who may be looking to make a quick profit.
The best way to establish a proper line of succession for your business is by drafting a will. In this way you can make a decision with regards to your business being carried on or not, as well as decide which person is going to be in charge from that point on. This can offer protection against unwanted sales and quick “cash-ins”, in addition to establishing the continuity that can be so important in maintaining business relationships over the course of successive generations.
Partnerships
As a partner in a joint venture, you’ll most likely have signed a partnership agreement. These usually contain provisions as to what exactly might happen when one or more partners pass away. However, in the cases when an agreement has not been written down, the partnership may simply end. This means the partnership will enter its dissolution phase, where the remaining partners only have the authority of pursuing actions that will tie up all the remaining aspects of the partnership such as collecting payments, resolving debts, distributing assets etc.
An agreement here would save a lot of trouble by carefully determining what actions the remaining partners must take in order to keep the business afloat. For example, a provision can be stated that allows the surviving partners to purchase the deceased partner’s share from the representatives of his estate.
Regardless of what the particulars of each case are, it’s plain to see that having a business will is a must. In today’s complex legal landscape, it’s also necessary for it to be drafted by an expert who can take the time to assess each situation and offer a proper evaluation.
For instance, an enterprising business owner can benefit from something called Business Property Relief, a legal provision that will exempt them from paying Inheritance Tax on certain assets after death. This usually requires the deceased person to gift said assets through their will. Of course, there are numerous limitations and criteria to consider, so it’s definitely best to have someone who is well aware of the local laws and regulations before drafting such a will.
Every person who’s managed to start and maintain a business throughout his/her lifetime will usually take a great amount of pride in their accomplishment. So make sure that your legacy will be honored and kept afloat by your successors by enlisting the help of a dedicated professional who can help craft the perfect will. This way you’ll be able to continue providing valuable support to your remaining family members without jeopardizing the fruits of your hard labor.