Leaving your business legacy behind

Perhaps as a business owner your Last Will and Testament is in place. Fantastic! What does this mean for your business?

?It is unnerving to explain to business owners that they must consider their options with regards to estate planning in the event of their death. It is an uneasy thought for business owners to implement priorities for after their death. In our experience, the easiest way to approach these aspects is, to have a clear understanding of the future endeavors of your business, prioritize the goals to achieve these endeavors and thereafter update your testament to practically include these aspects.

?Our core focus at Erasmus Botha Incorporated is representing SME businesses and the people who own, supervise and manage these businesses. We appreciate and understand that SME business owners are busy with operational, financial, marketing and HR aspects of their business and to plan for the future of their business.

While reading this article, ask yourself, what happens to my business if anything has to happens to me?

?All SME businesses have similar challenges in the event of the death of a key owner or manager. The standard questions are usually: Will my spouse step in and run the show? Do any of the children have a stake or interest in running my business? Does a key manager or other employee have the best chances of successfully running or owning the company?

?The last will and testament for your business, usually the Memorandum of Incorporation and Shareholders Agreement, may in fact be a Buy-Sell Agreement amongst the owners that provide for ownership, management and transition upon death. Another consideration is that the costing of transferring ownership upon death of any of the shareholders, can also be financed through key-man life insurance that can be expensed out through your business. Does your business have a plan in place?

?For all SME business owners, drafting a business succession plan and correct company documents, last will and testament and the appropriate power of attorney documents can add significant security for their company.? Failure to have these documents in place, can have nasty results for the company and for the loved ones you leave behind.

?Further, your spouse may be at great risk if you are married in community of property. This means that any profits and losses of your business are shared with your spouse. In the event of death, your spouse will be liable for settling your business’ debts, unless the core company documents are in place and specify otherwise.

?In conclusion, consider if you and your business have the documents, aspects and agreements covered, and if so, have someone explained to you the practical impact of these documents should something happen to you:

• Memorandum of Incorporation;S
• hareholder Agreement (shareholder deaths, departure or retirement, unexpected disability, owner termination, divorce, individual bankruptcy);
• Business Plan;
• Business Succession Plan;
• Buy-Out Agreement;
• Last Will and Testament;
• Antenuptial Agreement;
• Power of Attorney; and
• Trust Deed.

If you are unsure about any of the aspects and documents above, it is crucial to protect your business, your business partners, employees and your loved ones.

?Yolandi Erasmus

Director