In this article, we’re sharing our tips on how to avoid contentious probate as a small business owner.
Contentious probate lawyers deal with the most complex of cases when it comes to issues with probate, but is it possible to fence off your small business from falling into such legal battles?
In this article, we’re explaining what contentious probate is and how to avoid it as a small business owner.
How Contentious Probate Could Affect a Small Business
Probate is the legal process in which a person’s assets, including property, cash, investments and belongings are distributed following their death. Contentious probate is the term used when there is a dispute regarding the distribution of those assets, and this can occur when the deceased did not leave a Will.
In these circumstances, it will usually be up to a probate solicitor to hear all the evidence and, if necessary, refer the case to a probate court.
While a probate case can be complex, it can be even more so if a small business is added into the mix. In a contentious probate case, a person (for example a family member) may make a claim on all or part of the business to which they believe that they are entitled.
This can be extremely disruptive for a small business as it may be ruled that operations must cease, and accounts must be frozen until the case is resolved.
How to Avoid Contentious Probate as a Small Business Owner
As a small business owner, it’s essential that you protect your business for the future and, in this section, we’ll share tips on how you can do just that:
Have a Will in Place
One of the easiest – and most effective – ways of protecting your business from contentious probate is to include it in your Will. A Will is a legally binding document which details what should happen to all of your assets once you’re gone.
By including your business in your Will (and, more importantly, making a Will in the first place) and having it notified by a reputable solicitor is the best way of avoiding contentious probate and making sure that your business continues to be run by those that you trust.
A Business Continuation Plan
A business continuation plan is, essentially, a contingency plan for your business following a disruptive incident. While this can include a number of things including insolvency, criminal activity and unforeseen events such as a natural disaster or pandemic, it can also cover the death of the owner.
This is a document which every business should have in place, and it should include comprehensive detail about what should happen to the business in the event of the owner’s death. For example, who will take the reins immediately either temporarily or permanently.
Along with a Will, this document is a solid way of making your intentions known and avoiding legal disputes.
Appoint a Power of Attorney
As well as thinking about your death (which is never a pleasant thought), you will also want to consider what might happen to your business should you suffer a catastrophic illness or injury which prevents you from effectively running and making decisions for your business.
A good way of handling this is to appoint a power of attorney. This is a person that you trust to make decisions on your behalf should you no longer be able to make them for yourself due to injury or death.
Appointing a power of attorney is an effective way of making sure that your wishes and intentions are respected.
Living Trust
To this end, you may also want to set up a living trust which includes your business. This document is similar to a Will but with one important difference – a Will only comes into play after your death whereas a living trust is applicable immediately while you are still alive.
This can be useful in cases where your ability to make decisions during your lifetime is questioned and you either don’t have a power of attorney or this power of attorney has been declared null and void.
Avoiding contentious probate as a small business.
When you’ve spent a considerable amount of time, work and money on starting and building up your small business, the last thing you want is for it to fall into the wrong hands after your death.
You also don’t want your loved ones – who are already grieving – to suffer the stress of a lengthy contentious probate case. As we’ve highlighted in this article, there are some relatively simple ways of safeguarding your business – and your loved ones against this, starting with making a Will.
When putting together documentation such as a Will, power of attorney or living trust, it’s always a good idea to have this verified by a reputable solicitor and for that solicitor to keep copies to ensure that there is no ambiguity about your wishes at any time.
