A will is often viewed as important for the distribution of personal assets. However, many business owners or company directors often overlook the critical nature of a will to the ongoing success of their company or business.
An incomplete or incorrectly constructed will can have major implications for companies. In particular, if a sole director of a company dies without a will, the company will be left without an authorised representative to assume control of the company.
Ordinarily, if a sole director dies with a will, the Corporations Act 2001 (Cth) provides that the Executor to the Estate may appoint an interim Director, who will assume the role of Director until the Estate is distributed and company shares are transferred.
However, in the event of the death of a sole director without a will the following two options are possible:
- A relative or other person will have to apply to the Supreme Court for letters of administration to manage the estate.
- The Public Trustee may have to administer the deceased estate.
Both outcomes may take several months, which can have dramatic consequences for the operational ability of a company. Without a designated and authorised representative to make management decisions for the company, trading may cease. Staff may not be able to be paid and debts may accumulate.
If you are the sole director and shareholder of a company, it is critical that you make a will and make provisions in your will for the distribution of your company shares to your beneficiaries. This will help you to avoid the dire consequences of the above scenario.