This article are provided for information purposes only, and are not intended as legal advice.

Death and taxes – are you ready?

June 17th, 2009

There are two things certain in life, death and taxes.  Companies do not die therefore they will continue on even after you pass away.  If a company becomes insolvent and is declared bankrupt of the company is inactive and has not filed tax returns for a long time, the government may deregister your company.  Death for a shareholder is a certainty but are you ready?  Have you thought about the following?

  • succession plan for your business?
  • life insurance
  • do you have a will?
  • transfer of business to your children?  if you have designated your children as the new shareholders, are they interested in the business?
  • are you kids knowledgeable about the business? do they need a mentor until they are old enough?
  • if you are leaving your business to your spouse, it may be possible to transfer the shares of the business to your spouse on a tax free basis. See your accountant to determine if this is applicable to you.
  • do you have multiple wills in order to avoid additional taxes.  This is not applicable in all countries, see your lawyer for additional advice.
  • do you have multiple bank signing officers, if not, they will have to probate your will in order to appoint a new signing officier and this could take time
  • is there enough cash in the company to run
  • will the bank call all the company loans if you die?
  • if you have no heirs, can the business be sold and if so, have you started discussions prior to your death?
  • is there someone to run the business until it is sold?
  • have you reviewed your will lately?  who are the executors?  Are they your parents who are now 90 and in an old age home?  Will they be able to make business decisions?  You may need to review and make changes to your will at the last minute.  This can be done by way of a codicil rather than a total rewrite of the will.
  • If you make changes to your will at the end, can the changes be defensible or will someone try to argue that you were in no condition to make those changes therefore they could be challenged and  invalidated?

I summary, before you die, if you have a chance, review your will to make sure that your wishes will be looked after.  If you procrastinate too long, your wishes will never be known nor carried out.  Many people are afraid of talking about death and planning for their own demise but if you are a business owner, it is imperative that you have a plan of action and it is documented and can be followed after you are gone.

Filed under: Business strategies — Gary Landa @ 8:20 am

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