Who takes over my business when I die as a sole trader?
If you were running as a sole trader and you die then in most cases your legal personal representative will step in and manage your business. They will be in a position to assess if the business needs to be either wound up, sold or transferred to a beneficiary.
Your business asset forms part of the assets of the estate.
For many clients, they are unsure of the process.
There is a number of matters that should 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 as a going concern ! – The longer the business is left un-managed the greater chance that the business value may disappear
- Until probate takes place its best to ensure if a beneficary is to inherit the business that this takes place as soon as practical or allow the beneficiary to act as caretaker mode
- Reassure customers and suppliers of the situation and ensure where possible that the business remains of value and assets are protected from going missing
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 then the estate is placed in bankruptcy.
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 to manage 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.
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!
Suggest that you contact us and discuss a plan so that we can guide you on how you would like to finalise your affairs after the man upstairs has called you for higher duties.