There are a number of things SMEs must consider when writing a will. They are as follows:
- Family trusts: Where the deceased is the appointer of the trust, provisions must be made to pass on this power after their death. This may be possible through their will.
- Continued operation of an SME business: It is important that the executor of the deceased estate is appropriately skilled to facilitate the continuation of the business before beneficiaries decide whether to continue or wind it up.
- When the deceased is not the sole owner or operator: Family members could assume the deceased’s role or remaining owners could buy out the deceased’s interest. Structuring buy/sell agreements and fund raising can give rise to significant tax implications.
- CGT: Where business assets are held personally, death is a CGT event for which there may be various small business CGT concessions such as rollover relief or other taxation concessions.
- Illiquid SMSF assets: Superannuation law requires the beneficiaries to be paid quickly. This can present problems in relation to continuity of the business if, for example, the commercial property is the main asset and it must be sold to pay the death benefit.
For more information, please refer to ‘No will? No way!’