It has always been extremely important for business owners to ensure that they have an up to date Will in place, to secure the ongoing running of their business on the event of their death.
Where a person dies without making a Will, then the administrators of their estate will only have any authority to deal with the assets in the estate as and when a Grant of Letters of Administration has been issued by the Probate Registry.
Dependent upon the complexity of the estate, and how busy HMRC and the Probate Registry’s are at the time, this can take a number of months to obtain.
However, the recent case of Williams v Russell Price Farm Services 2020 8WHC1088CH has highlighted where problems can occur even where the deceased has made a Will, in circumstances where they were the last surviving shareholder and director.
In this case, for various reasons, the Executors were not in a position to apply for a Grant of Probate to enable the shares in the business to be transferred into their name for quite some time.
In the interim, there was a period of limbo, given that there was no legal owner of the shares with the authority to appoint a director. This meant that there was no-one with the authority to sign on the company bank account, meaning that the business was unable to trade.
The Executors to the estate found themselves in a situation where they had to apply to the High Court for an Order to have themselves appointed as directors. The cost of that application will have been very significant.
To avoid such a situation arising with regard to your own business, it is essential firstly to have a Will in place, so that you have appointed Executors with authority to act from the moment of your death and secondly to ensure that the company articles do include a provision whereby the Executors of the last surviving shareholder have the authority to appoint a director or directors.
The cost of dealing with this is modest and will avoid significant disruption and expense in the event that the unexpected happens.