Need legal advice on what happens if I or my business partner dies.

FrankFalcon

Hi all

Before, I start, please allow me to make it clear that I am not asking here for actual advice.  I am asking here where to start looking for the best advice and who can give me/us this advice at a fair price.  I hope it's not too complicated.

So, my business partner and I have built up a very successful business over the years.  We have been in partnership for over 20 years and are lucky to have done well.  Well, time meets every man and after hearing some bad news about an old colleague dying recently we decided to have that conversation about what if either myself or my business partner were to die or become unable to work.  None of us have family who would/could take over our role.  I said to him
"If you die, I couldn't/wouldn't run this business on my own"
He replied the same.  Our wives both work full time and they have both said they wouldn't want to try and run the business.  A nice problem to have is that the business has substantial assets.  So, we realise we need to take some formal, proper advice but we don't know where to start looking.  Is this situation common?  Is there a formal name for such an agreement.  An example is...
He dies, I am left with the business and the 10 employees.  I don't want to/couldn't run the business without him.  His wife wants her share of the assets...What do I do...I don't want to buy her out because I am left then with the business I can't run alone.  
Has anybody got any advice who we should contact here? What we should do now?
Thanks all.

elsien

I can’t answer your direct question, but I would also suggest that if you haven’t already done so you both set up a business financial power-of-attorney. 

So that if one of you was incapacitated the other can carry on in the short term for any decisions that might need the two of you to implement. Or indeed, if one of you loses capacity and doesn’t regain it, you have an easier mechanism for selling or winding up the business than the significant delays if someone has to apply for deputyship

FrankFalcon

Aghhhh! That might be just what we're looking for.  I knew someone would come up with the correct term.  Thank you

elsien

Just to be clear, this is while you’re still alive, but lose your faculties. Anything that happens after you die is a different scenario. And presumably is what you will would be for? 

And when I say business power of attorney that just means a power of attorney specifically relating to the business. Which I only know about because my brother has two financial powers of attorney, one for his personal finances and one for his business With his manager appointed as the business attorney while  it is sold on. Obviously that only works if you’ve got a good manager who you are sure won’t be jumping ship to go elsewhere. So you need to think about whether you just wanted your business partner to have LPA, a family member, a solicitor, it’s another discussion to have. 

DullGreyGuy

Is your legal structure a traditional partnership or something else? People can be a little lax with their terms and answers will be different if you are a traditional partnership or LLP or Ltd etc

FrankFalcon

Basically, what I mean is...
Say I get hit by a bus tomorrow and can no longer run the business (but am still alive)...My partner will want to wrap up the business but in doing so making sure my wife get's my half.  Much the same...if he gets killed then I can;t carry on...Obviously I will close the business and make sure his wife gets her half...I know this sounds to generic etc but hopefully the right person will ask us the right questions...
Thanks again

Marcon

What does your partnership agreement say? That's your first port of call.

If you google on 'selling a partnership' that'll give you masses of links, many of which will give you helpful pointers and further info.

Brie

FrankFalcon said:

Basically, what I mean is...
Say I get hit by a bus tomorrow and can no longer run the business (but am still alive)...My partner will want to wrap up the business but in doing so making sure my wife get's my half.  Much the same...if he gets killed then I can;t carry on...Obviously I will close the business and make sure his wife gets her half...I know this sounds to generic etc but hopefully the right person will ask us the right questions...
Thanks again

playing devil's advocate...If you get hit by a bus and are still alive no one should be giving your half the business to your wife.  They should be giving it to you and perhaps your wife (or best friend or eldest child) will have a financial POA to deal with your finances for you while you recover (or until you die).  If he gets hit by a bus and dies then his half the business goes to his estate.  Unless you have something very different specified as part of business succession planning.  

TELLIT01

You need to speak to a solicitor to get the arrangements for such a situation in writing.  Then there can be no question about what was agreed.  The last thing you want if your partner dies is for the spouse to say "Well, I thought the agreement was xyz if you think it was abc"

Savvy_Sue

And a solicitor will also know the right questions to ask, and they'll include the ones about what sort of partnership it is, and what the partnership agreement says about winding up the business etc etc etc. But you need one who deals with partnerships, not someone whose bread and butter is house sales or divorce. 

Elliott.T123

I have no legal knowledge here I am just throwing ideas out there that you can look into.

Personally I would be looking to see if there was a way that if one of you were to die the other person inherits control but that the deceased persons spouse still inherits their financial share.

If it were a Ltd Co I would say could you pass on class B shares so that the surviving individual maintains the business decisions until it is wound down or sold but the spouse still gets 50%.

Alternatively could you pass 49% to a spouse and 1% to the business partner so they are able to get things closed down / sold easily?