Businesses and estate planning

Date: Aug 17, 2011

Many Australians do not have a valid will in place, meaning that their estate - including any business assets - may not be distributed according to their wishes.

There are a number of reasons why this may be the case. People may not be aware how to construct a will or get confused by the laws and requirements.

Other cases may see an otherwise legal document made void due to changing circumstances - such as marriage and divorce.

If a person dies intestate - without a valid will in place - their possessions and funds will be divided by a state representative.

Because a business is considered to be an asset in the same manner as money, shares and land, it is governed by the same state legislation.

A statutory formula is applied to the property that, in many cases, will not reflect the deceased person's wishes and does not take into account the financial circumstances of loved ones.

In some cases, an estate can be presented solely to the state government.

However, under Australian law certain family members, spouses and partners can apply to the courts to be the administrator of a deceased person's assets.

A letter of administration can be supplied to the applicant that allows them to have increased levels of control over an estate's division. However they are still bound by the same laws as a state appointed representative.

For a business owner to have their wishes carried out, they need to appoint an executor to oversee the distribution of their assets.

This person can be a trusted friend or relative, but cannot receive any of the estate for themselves.

However, provision can be made for any costs associated with the distribution - such as hiring an experienced family lawyer - to be covered by the will itself.

A trusted law firm can provide the executor with experience and advice on legal matters relating to the identification and collection of the necessary documentation required for the distribution of a business' assets.

They can also offer valuable advice regarding tax liability on asset gains and the repayment of an organisation's debts - issues that require attention before a business can be dissolved.

Planning a valid will and testament can spare friends and family the task of making painful choices on matters where a cool head is required.

By talking to an experienced family lawyer about your estate planning process, you can ensure that your business' assets are put to the best use for your loved ones - as you see it - with minimum interference from the state.