Category Archives: Business Owners

Dealing with business assets during Probate

Dealing with business assets during Probate…

When the owner of a business dies, probate can be lengthy and complicated as their business assets have to be valued and transferred.

Whether business assets are sold or transferred depends on the way in which the business was owned and operated as well as the wishes of the deceased.

The estate’s executor or administrator will need to obtain a Grant of Probate or Letters of Administration enabling them to deal with the business.

Sole trading and probate

If the deceased was a sole trader, then their finances and assets are simply treated as part of the estate.

Business partnerships and probate

Where the deceased was in a partnership, there would normally be a partnership agreement giving details of each partner’s contributions and liabilities. It should also set out what is to happen in the event of the death of a partner.

The deceased’s estate will be liable for any debts or a share of partnership profits. Separating the estate from the partnership may well be complex and an executor or administrator should take independent legal advice on behalf of the estate.

Companies and probate

Where the deceased owned shares in a company, the company’s Articles of Association will govern how shares can be sold and/or transferred, for example if first refusal must be given to company directors.

The executor or administrator will need to contact the company secretary and arrange for valuation of the deceased’s shareholding.

Complications

It may be that the business will need to be sold or shut down. If there are redundancies, there may be liability to make payments.

If it is advantageous to keep the business running while a buyer is sought, then someone needs to be appointed to do that. If there are other owners or partners, then liaising with them will be essential.

As well as dealing with probate, the executor or administrator may also find themselves having to deal with questions of employment law, company law, property law and insolvency.

For this reason, it is highly recommended that when the deceased owned a business, professional legal help is sought.

If errors are made during the administration of an estate, executors or administrators may be held personally liable.

If you would like expert help in dealing with a probate matter, call us on 01243 216900 or email us at info@legalmatters.co.uk.

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Client Testimonial

Client Testimonial…

When you lose someone you love it is always a difficult time. Having to deal with the paperwork involved in administering an estate after a death – and when you’re grieving – can be extremely upsetting.

That’s why at legalmatters we will always try to make the process as pain-free as possible for you – and why we’re always delighted to hear from a client when we’ve helped a family or an individual through such a stressful time. So thank you Jane for your kind words.

“Thank you and Megan, and all in the office staff for making my journey – sorting my dad’s estate through yourself and legalmatters – a professional, reassuring and stress free time. It’s been a pleasure and I would highly recommend you to friends.”

Are there any restrictions as to who can make a Will?

There are certain restrictions as to who can make a Will, including age and capacity.

In England and Wales you generally need to be 18 before you can make a Will. It is always advisable to make a Will once you reach that age, even if you feel you might not have anything much to leave.

You can include your wishes for social media accounts as well as leave gifts of items other than cash which you may want friends or family members to receive from you.

If you own your own home or are involved in a business you should make sure you have a Will.

Those under 18 may be allowed to make a Will if they are in the armed forces on active duty or they are sailors at sea. A law introduced during the First World War allows young people in these circumstances to make a Privileged Will allowing them to leave their possessions as they wish.

Other restrictions on making a Will

You are required to have ‘testamentary capacity’ to make a Will. This means that you must fully understand the nature of the document and its effect.

You also need to know the extent of the property you own.

Finally, you need to be able to understand the moral obligations you should consider, for example whether you have any dependents who are more in need of financial help than others, through illness or incapacity or because they themselves have dependents.

When should you make a Will?

You should make a Will straight away if you don’t already have one, and plan to review it regularly, particularly as life changes.

You may want to have your Will rewritten on the arrival of children or grandchildren or if you get divorced.

If you marry, any Will you have will become invalid and you will need a new one or your estate would pass under the Rules of Intestacy.

If you own a business or are in a partnership you should have a Will drawn up taking this into account.

If you are co-habiting then making a Will ensures that you can leave that person something if you wish. If you die without making provision for them, it is possible they will receive nothing.

A recent survey found that three-quarters of adults questioned did not have a Will. Whatever your circumstances, if you clearly set out your wishes it not only means that the administration process will be easier for people, but you can be assured that your beneficiaries will receive exactly what you want them to have.

To speak to someone about writing your Will, call one of our specialist team at legalmatters, on 01243 216900 or email us at info@legalmatters.co.uk.

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Business-owner

Dealing with a business after owner’s death…

When the owner of a business dies, administering the estate can be a complex affair.

A business forms part of a deceased’s estate and can be left under the terms of their will. However probate is far more difficult to administer when a business which is a going concern is left. In this event, the personal representative will almost certainly need specialist help to deal with the transfer of the business and any shares or alternatively with the winding-up.

Immediate decisions will need to be taken if the business is operational. The more planning the deceased has put into this, the easier it will be. There is a substantial risk to a business when its owner or part-owner dies that it will not be able to continue, or that its operation may be hampered in the short-term.

Preparing for this eventuality will mean that things can continue as smoothly as possible and the benefit of the business will be able to be passed on in the way the deceased would have wished.

Depending on the structure of the business, different actions may be needed.

Sole trader

If the business owner operated alone, the business simply becomes part of their estate and any debts will be paid out of the estate.

Partnership

Ideally a partnership agreement will have been drawn up detailing how the death of a partner is to be dealt with. If this hasn’t been done, the effects can be catastrophic for both the business and any remaining partners.

Death will cause the dissolution of the partnership and the business would need to be wound up. This could take years and be complex to achieve. Any remaining partners would need to start a new business, alongside trying to finalise the old one.

Each partner would be liable for their share of any debts. If the business is in profit, the deceased partner’s share would become part of their estate.

Private or public limited company

If the deceased owned shares in a company, these would pass under the terms of the will or in accordance with the rules of intestacy to the beneficiaries.

If a shareholders’ agreement exists, this may give the other shareholders a right to buy the shares at market value, with a given time period for them to raise the necessary funds.

Sole director

Where the deceased was the sole director of a company, the personal representative will need to register the shares in the name of the beneficiary and also appoint a new director, and possibly a company secretary as well.

When someone actively involved in running their own business dies, it can be complicated for the executor or administrator to deal with. It is always a good idea to call in specialist help to deal with matters as quickly and efficiently as possible so that the business can continue.

To speak to someone about winding up an estate that includes a business, call one of our specialist team at legalmatters, on 01243 216900 or email us at info@legalmatters.co.uk.

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Business in a Will

Why, as a business owner, you need a solicitor to write your Will…

When you own a business, not using a professional lawyer to draw up your Will is almost always a mistake.

Failing to cover all your assets and not considering issues around inheritance tax, executors and trusts are two common mistakes made with a DIY Will. But even the smallest of mistakes could render a Will invalid – such as if it’s witnessed by the wrong people or number of people; if it’s not signed or dated in the right place.

Having a valid Will in place is essential if you want the final say in what happens to your business and other assets after you die.

If you die without a Will, or if it’s invalid, everything you own – including business and non-business assets – will be distributed under the laws of intestacy. Which means that you or your loved ones will have no say as to who inherits. To avoid your assets being dealt with under the rules of intestacy, your Will should detail what will happen to your business shares.

Business assets

When you die, any shares or interest you own in a business become an asset of your estate. Without a Will, these shares could be sold, the company could be broken up, or it could run into trouble without the correct day-to-day management in place.

For example, you might know who you want to inherit your business after you die, but what happens if there’s a tragedy and these people don’t survive? A professional solicitor will know what questions to ask to make sure that your Will covers all situations.

Take a look at the package “Business Wealth Protection” which we’ve put together specifically for business owners. We will look at all eventualities and the Will we draft for you will include a trust and letter of wishes to ensure that inheritance tax is handled in the most cost-efficient way.

In some cases, you might already have a partnership agreement or company papers in place that set out what will happen to the business after you die. These types of contracts are usually put in place if more than one person owns a business and you want the company to continue after your death. You should also consider whether you need a business lasting power of attorney. We’ll help you decide what legal documents you need to draw up in order to carry out your wishes and best protect your business and your loved ones.

It is always important when drawing up a Will that it is done correctly, and for business owners this is more complex. We can help guide you through the process. Just speak to one of our expert team by calling legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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