It’s Only You in The Business – What If You’re Out of Action?
01 Feb 2021
- Estate planning
- Wills & Estates
Running your business through a Company makes sense for risk management. You have already had advice about some of the benefits that make the extra set-up costs worthwhile. Here are a few:
- employing staff and paying contractors is easier;
- there is a better chance of protecting your personal assets;
- you can turn your hard work into an asset for the future.
For the business to be flexible, you are the sole director and shareholder of your Company. It is easier to make decisions, pay bills and generally get things done.
Nobody likes to think about the worst-case scenario, but if you have put the effort in to set up the business, there is a further step to make sure money is not wasted if you are suddenly out of action:
- Make an Enduring Power of Attorney
- Make a Will
The law says that if a sole director/shareholder dies or loses capacity to run the business, then the personal representative or trustee can appoint a new director to keep the Company running. This includes paying wages and tax, dealing with banks; keeping your business licenses valid and all the work you are doing in the business now.
If you have made an EPoA and a Will, then the personal representative is the person you have chosen to take over when you can’t run the business. If you do not have an EPoA or Will, then the people close to you have to spend a lot of extra time and money to sort things out.
If you don’t have an EPoA and you lose capacity, then your family or friends have to apply to ACAT for an order to appoint someone as your guardian.
If you don’t have a Will and you die, then your family or friends have to apply to the ACT Supreme Court to appoint someone to administer your estate, including running your business. This could cost thousands of dollars more than it would if you had a Will.
Remember that if something has suddenly happened to you, it is a very difficult time for your family and friends to be dealing with extra paperwork and expense.
Make it part of your working day to think about protecting your business if you are out of action.