Wills – is your business prepared?

July 19, 2019

Rebecca Harbron Gray is a wills, trusts and probate practitioner at Gordon Brown Law Firm LLP as well as a Society of Trusts and Estates Practitioner (TEP) and a Solicitor for the Elderly member. In this article, Rebecca highlights how important it is for business owners to make a will

The toughest and most distressing of appointments I encounter are from meeting people where their spouse, partner or business partner has died and not left a will.

With the loss of someone so integral to a business, especially at a time where changes are required to re-distribute roles, not knowing who the party is that inherits or has powers to administer the business assets can be disconcerting and worrying for any surviving business owner, as well as the family.

Dying without a will and being a business owner is a void in a business that can be hard to fill at an already difficult time. It is important that all business owners prepare for this moment should the worst happen. By understanding the impact of a sudden death in your business now and acting to mitigate the risks that the business could face may even save your business.

For owner-directors, wills can help provide enough legal protection for the surviving business owners, as well as the deceased’s family. We believe it is about achieving a manageable balance between ensuring continuity and protection of the business while striving to provide for those left behind in the family.

The priority to the surviving business owner may be to continue the business in the immediacy but longer term planning provides mechanisms to ensure that those running the company are not prejudiced by their deceased partner’s family, who may have a different agenda altogether.

It can be crippling for the surviving business owners who are left without anyone in the immediate aftermath of the loss of their business partner, with nobody of authority to run the company alongside them, or at all.

This position can be significantly worsened when there is a sole director who owns all of the shares in a company. If the company was incorporated before 2007 and does not have bespoke articles of association, there is no right for that director’s personal representatives to take control of the company until they are registered as shareholders – a process which can take months.

In many cases, this will mean that staff cannot be paid, orders cannot be taken or fulfilled and the company’s bank accounts will be frozen. The courts can offer relief but this is at their discretion and the unexpected death of a sole director does sometimes result in the liquidation of their company.

Ask yourself: Do my business partner(s) have a will and, if so, who is their executor? Has regard been given to the running of the business in any will? Will my executor have the power to take over the running of your company? Can my children who have invested their careers in the business make decisions? How will asset distribution among my children work if one is a partner in the company and the other is not?

If any of these questions strike a chord with you, please act now. Add it to the next business agenda or invite us to come and meet with businesses on this topic. We work closely with our corporate and commercial team who can look at your originating company documents to ensure the correct structure is there to be able to fulfil your wishes.

Gordon Brown Law Firm
Email us at ineedawill@gblf.co.uk quoting this article for a free initial appointment to discuss your options.
www.gblf.co.uk

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