Sole Trader deceased? Can the executors continue to run the business

pking1601

My father in law has died. He was a sole trader with a profitable business. His daughters are the executors and beneficiaries of his will and wish to continue to run the business for the time being, with no loss of trade etc and saving people's jobs.

An initial meeting with the bank wasn't very helpful but I don't think they had all the information to hand as they were worried about the business but they will be returning with a solicitor.

Is it possible to keep the business running as if a seamless transition and what should they do?

madbadrob

As beneficiaries there is no reason why they shouldnt keep the business going. So long as tax man is informed that there is a new owner/owners. It will of course depend on what the will states.

Rob

getmore4less

how are you going to value the business?

what are you going to do with the capital accounts

I suspect that the legal business ceases to exist on death

I suspect there are special rules for inheriting the business assets on death relating to it's value(things like the goodwill).

bank accounts etc. may be an issue they should get frozen

have you been part of the business in any way.

does it employ people?
does it have any leases or licences needed to run the business.
any indemnity insurances needed

are you planning to take on long term liabilities like warranties.

I don't think there is anything that stops you running the (new?)business as executors but check the tax situation while the business exists as part of the estate before you actually take it on.

One other issue is that Sole trader is just that 1 person since there are more than 1 of you it will need a review on the business structure.

I think a good google session is in order

madbadrob

http://amicuslaw.co.uk/userfiles/files/How%20Would%20Death%20Affect%20Your%20Business%200911.pdf Is a good overview and apparently executrs have no formal right to take over the business unless the will says so

Rob

getmore4less

the benificial interest held by the beneficiaries probably allows them to do something.

the main issue is liability.

madbadrob

I agree totally and think they should seek advice from accountants and solicitors here. The ultimate decision is how the will is worded

Rob

getmore4less

With a will and the executors being the beneficiaries there are fewer issues than other combinations.

as with everything in this area(admin of estates) no one polices any of it, it will come back to liabilities and licences.....

It will depend on the business and what it does the exact details

In the simple case you shut down the old business, create a new one using the assets of the old one(setting up any new liability) including the trading name and carry on as normal.

who will know or care? (employees but they tend to care more about their jobs so TUPE them)

look at people that phoenix companies.

madbadrob

TUPE Would come into effect no matter which way they carried out the changeover. The new owners no matter how they transferred the business would basically be creating a new company.

However I go back to my original point. If the will states that the business should be sold as a going concern then the executors would have to sell the business.

Rob

getmore4less

madbadrob wrote: »

TUPE Would come into effect no matter which way they carried out the changeover. The new owners no matter how they transferred the business would basically be creating a new company.

However I go back to my original point. If the will states that the business should be sold as a going concern then the executors would have to sell the business.

Rob

if the will says sell it the executors can sell it to the beneficiaries.

Oh conveniently that's the same people..........

madbadrob

Assuming the beneficiaries have the money to buy it. Yes I know they will get the money back etc and therefore no money need to change hands. Its all ifs and buts.

Rob

pking1601

Thanks to everyone for replying. It's been really interesting to read different views.
As I understand it everything goes to my wife and sister in law. Nothing is stated as far as the business but they feel duty bound to continue with the business. It's certainly land rich, not sure about cash.
I can see the Bank being the main stumbling block but my father in law had the same solicitor and accountants for 30 years and they will be with my wife and sister in law when the bank finally grants them an appointment, which is proving easier said than done.
I understand a separate account, maybe an executors re account or a new company account will have to be created, hopefully same name. They are hoping the bank will release some money from the old account to help maintain the business continuity but we have been told the bank might open an account but give the new business a loan/overdraft to start with, earning some money for themselves as well.