We have all, at one time or another, thought about how we will
look after those we leave behind once our lives end. But have you
ever spared a thought for your business, sitting lonely in the back
row, grieving over your loss?
While this might be a trite and slightly silly image, it brings
up some serious issues. Who will look after your business if you
die? Or if you become sick and unable to look after yourself? The
issue becomes even more complicated when there are business
partners or co-owners involved.
If your business partner suddenly became ill, would you be
comfortable running your business in partnership with their spouse?
Or children? Would their spouse or children even want anything to
do with your business?
The way most people's estates are set up, their share in any
business they own is treated as part of their general assets, and
bequeathed in accordance with their will to their partner/spouse or
children, along with the family home and other assets. But what if
you are the business partner that is left behind and you can't
work with the beneficiaries? They may not be interested in
contributing, want to contribute too much, or just want to sell the
business and you may not be able to afford to buy them out.
We recently acted in a matter involving a family run business.
The founder passed away leaving a child working in the business and
two other children. The other children decided that they wanted an
active part in the operation of the business. This led to difficult
discussions and decisions that affected the operation and value of
the business. This could have been avoided if the founder had
documented his wishes and discussed the situation with each of his
children prior to his death.
As Business Lawyers, we have also seen business partners and key
employees leave a business with all the skills learned and
contracts made to go to a competitor or start up their own
business. Their actions and the relationships that they had built
up with customers made it a difficult time for the business
There are agreements and documentation you can enter into to
protect yourself if these situations were to occur, and it can
prevent a myriad of issues arising at a time that will already be
stressful and painful due to the loss of someone close to you.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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