When I die what happens to my business and my affairs? Will my business continue or just stop?
If you were running as a sole trader and you die, in most cases, your legal personal representative will step in . It is their role to manage your business. They can assess if the business needs to be wound up, sold or transferred to a beneficiary.
Your business asset forms part of the assets of the estate. Therefore legally executed will , can help give certainty to your wishes.
Many clients are unsure of the process of what happens once they die.
There are several matters that should be dealt . These need to be dealt with in a timely matter when it comes to a sole trader business.
What happens after I die? The process of winding up my affairs
The process that can take place after death include
- The business continuation is a going concern ! – The longer the business is left un-managed, the greater chance that the business value may disappear
- Your executor will take control of your business until its decided upon . It maybe be sold wound up or given to a beneficiary as part of the estate distribution
- Choose your executor wisely that can deal with your business affairs
- Until probate takes place, its best to ensure if a beneficiary is to inherit the business that, this takes place as soon as practical. If this cant take place then allow a beneficiary to act as a caretaker mode
- Reassure customers and suppliers of the situation., Ensure, where possible, that the business remains of value and assets are protected from going missing
- Chase down outstanding monies and secure the business assets from theft. Stop and people thinking well the business owner has died they won’t care!
The business forms part of the estate and impacts the final distribution to beneficiaries. Often upon the death of a sole trader, there may be outstanding debts to the ATO, suppliers and financiers. If there are insufficient assets upon realisation to pay the debts, the estate is placed in bankruptcy.
Sometimes a business who is a sole trader dies suddenly leaving lots of debt. If the estate is unable to pay, then the estate becomes bankrupt. Pleas talk to us if this maybe your situation for a person you are acting for after death.
For those who run their business in a Company or a Family Trust
If you choose to operate your business as a Company or a Trust, your legal representative should be appointed as the Director or Trustee in your place. In this case, the business would continue. The ownership if the shares were owned by you it may form part of your estate. This may include any loan account owing to or from the Company.
If your ownership of your business is held by your Trust then you will need to consult your Trust Deed and control will also be held by the appointor and or Trusteee. This is an interesting area of law and taxation and we suggest you consult us.
Careful planning required
We suggest careful planning of your affairs. Planning will ensure that when it comes to your business, your wishes and adhered to and that a plan in cases of death has been considered to assist the executor in managing the sale of the business. It is why for many reasons, Life Insurance is recommended. Insurance will ensure that insurance proceeds can cover some of these unexpected business expenses.
If you are an executor you need to act to preserve the business value and we can help here
As a final tip is to make sure all registrations such as GST, ABN, social media accounts and WorkCover have been cancelled. This will avoid recurring notices. We can assist you here!
We welcome you to contact us and discuss a plan so that we can guide you on how you would like to finalize your affairs after the man upstairs has called you for higher duties.
Reach out if you need our help