And busi­ness

CityPress - - Business -

Nokuthula writes:

We have been hap­pily mar­ried for 38 years in com­mu­nity of prop­erty. My hus­band and I run a busi­ness with our son. We have a will, but I be­lieve that as we are mar­ried in com­mu­nity of prop­erty, our bank ac­counts will be frozen if one of us dies. How do we avoid that from hap­pen­ing be­cause the busi­ness would have to con­tinue op­er­at­ing?

Michelle Dubois, le­gal mar­ket­ing spe­cial­ist at Lib­erty, replies:

One of the most im­por­tant fac­tors to con­sider when run­ning a busi­ness is con­ti­nu­ity. In the event of death or dis­abil­ity of one of the key peo­ple in the busi­ness, it is vi­tal that the op­er­a­tion is able to con­tinue run­ning suc­cess­fully.

One of the ways to do this is to con­sider reg­is­ter­ing the busi­ness as a sep­a­rate le­gal en­tity – for ex­am­ple, a com­pany or close cor­po­ra­tion. This will not only give you per­pet­ual suc­ces­sion, but sep­a­rate the busi­ness’ fi­nan­cial af­fairs from your per­sonal af­fairs.

You will need to con­sult a fi­nan­cial plan­ner or ac­coun­tant to ad­vise you on the dif­fer­ent meth­ods avail­able so that you do this in the most tax-ef­fi­cient man­ner. You will then be able to open a sep­a­rate bank ac­count in the name of the busi­ness.

The next step is to con­sider what will hap­pen to the own­er­ship of the busi­ness in the event of one of the share­hold­ers pass­ing away. You have al­ready drafted a will, which is a cru­cial foun­da­tion of any fi­nan­cial plan.

Make sure your will in­cludes men­tion of your shares in the busi­ness to avoid any con­fu­sion and un­cer­tainty.

Re­mem­ber that be­ing mar­ried in com­mu­nity of prop­erty means your joint es­tate will be split in equal shares on your death. Your will then reg­u­lates who will in­herit your share of the joint es­tate.

You may also want to con­sider tak­ing out life cover so that the re­main­ing busi­ness part­ners would be able to buy the com­pany shares from the es­tate. This will en­sure that the busi­ness con­tin­ues to run un­hin­dered and that the sur­viv­ing share­hold­ers are not bur­dened with fi­nanc­ing the pur­chase of the shares.

A key­man pol­icy can also be of value if there is one or a few key per­sons in­stru­men­tal in run­ning the busi­ness. If their ab­sence will re­sult in fi­nan­cial loss, this can be a blow for the busi­ness.

A key­man pol­icy will en­sure that there are funds avail­able to the busi­ness to re­place the lost skills and tide the busi­ness over while the tran­si­tion is tak­ing place.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.