The death of business owner can mean the death of the business.
Special expertise is required where a business owner dies. Or indeed, loses the ability to make decisions due to accident or illness. Our probate and estate planning barrister will be happy to have a quick chat with you to see how urgent action is, as this will depend on the structure of the business. What needs doing will also vary. She can better advise you in advance, to make sure there is a proper succession plan and all the necessary documentation in place – death or disability can strike unexpectedly.
When a small business owner dies, it is quite possible that the business will fail unless very rapid action is taken to allow the executors or administrators to continue running the business. So it is important that the advance Legal Planning takes the issues for the family and employees into account and is reviewed as circumstance change over the years.
In many cases, as soon as the bank learns of the death, bank accounts will be frozen. This would lead to staff and creditors not being paid, for perhaps 6 to 9 months which would clearly be a disaster. As far as shareholders in limited companies are concerned and the death of a partner in a business, then the issues are quite different from those of sole owners. But they can be much more complex, and the needs for advance planning even more crucial. Many a widow or widower has expected a handsome sum from the sale or continuation of a business and received not a bean, because the basic precautions were not made. So if you are married to a business owner, it is up to you to make sure they have guaranteed your situation as far as possible. Exactly the same applies if you work for a business run by the owners (and indeed in some larger businesses.
Death of Business Owner: rapid action needed.
What is needed is prompt action to secure the authority to carry on running the business so as to preserve it as an asset and a legacy for those who will inherit.
This action needs to be taken very quickly before panic starts to set in amongst staff and suppliers. As far as staff are concerned, the best ones will find it easier to get new jobs quickly, potentially leaving a business crippled by the loss of what remained of the experienced and senior staff now the business owner is no more.
All business owners should have a succession plan in place and where possible, staff who can carry on despite the death of the business owner or their disability for a significant period. It may be just a few days before the business starts to unravel, and both the value and the jobs vanish for ever.
Remember, the business can’t even be sold until probate has been granted, so keeping it going in the meanwhile is crucial. And it is not an issue which many firms will have the expertise to deal with.
We can offer advice both in planning terms for the death or disability of the business owner and for sorting things out if the necessary planning is not in place.
Disability of business owner – big problems without advance planning.
Strangely, the disability (in the sense that they are not able to make decisions temporarily or permanently, typically through accident, stroke or mental health issues) of the business owner is far harder to sort out quickly than their death, and the planning is often fairly inexpensive and can be paid for by the business. It is however a fairly slow process as bureaucracy plays a big part.
So either way, please contact us and we will endeavour to sort things out for you as economically and rapidly as possible. The death of a business owner can be a disaster, and is best planned for (contact our Estate Planning department) but requiries immediate action if it is too late to plan.