Wills & Living Trusts

Most small businesses start with a good idea. A product or service that other people want or need or both. Often it is something you have already done for a company but know that you can do it better. At some point the big decision is made to go it alone, either by yourself or in a partnership with someone else who complements your abilities.

After the magic three year make or break period is over and a business is running smoothly the chances are that you have built around you an infrastructure of support systems – bank accounts, premises, computers and perhaps some employees (you could well reach this stage before) and last but not least some clients, customers or professional colleagues to whom you have certain responsibilities.

What, then, happens to all this if you die suddenly? In any situation the absence of a Will increases the distress of those nearest and dearest to you, Guardians for children, financial arrangements and who is empowered to run the business in your absence can all be put in place in the same document.

It is possible in a Will to appoint executors whose only responsibility is to keep the business running until it can be sold, brought to a controlled end or handed on to beneficiaries within a specified time frame. In the absence of such an appointment your existing executors will bear the burden, or in the absence of a Will the next of kin.

The additional powers will allow your special business executors to write cheques and issue invoices thus keeping the business 'alive'. If nothing is done bank accounts are frozen and new and current business stops. Unless a solution is found quickly your asset will turn very fast into a liability because of the unpaid bills – rent, phone, suppliers etc.

The value of a partner's share in the business is part of their estate and the surviving partner (s) are responsible for paying that money to the heirs of the person who has died. Often this is not available as cash and has to be found by the survivors, putting an intolerable burden on a business, which may now be without its key person.

One very simple solution is to insure everyone in a business with the surviving partners as the beneficiaries, thus allowing them to pay the heirs and have some cash over to carry them through a difficult transition period while they adjust their positions and replace the partner who has gone.

Life is tough enough without these sort of problems with which to grapple and it can all be fixed so easily. There are experts available to help, please use them and take your responsibilities seriously.