How important is my will for my business? How does it affect the business, if one dies without making a will?
Running a business certainly keeps one busy and too busy to make a will. This will cause problems for dependents and the business.
Who will run the business? Will it be necessary to retain or sell the business? What is the value of the business? What happens to ownership of rights or intellectual property such as trademarks?
Other issues arise in the situation where you have a business partner. Plans need to be made for what will happen in the event of either partner passing away. Issues that need to be dealt with include:
a) Whether the surviving partner buys out the other partner’s share according to an agreed valuation formula
b) How the surviving partner is likely to afford to pay out the money to the beneficiaries of the estate for the deceased partner’s share
If it is unlikely the surviving partner will be able to afford the payout, the partners should consider an investment (or life insurance) plan that will yield enough money to make the buyout possible.
If no such buyout is contemplated, each partner may need to nominate and train a beneficiary or executor to the estate (or a salaried replacement) to take over the partner’s role in the business. Of course, each respective surviving partner must be able to work with the nominated replacement.
In light of all the above, the selection of your executor also becomes a critical consideration.
All of these issues must, of course, then be addressed in your will. There are numerous business issues facing the executor and beneficiaries of your estate. If you die without detailing how the business is best dealt with, the only memories your loved ones may have of you will be traumatic ones!
For business owners, a comprehensive will is a commercial necessity.
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Behan Legal advises and assists on these important issues. For an appointment, call 03 9646 0344