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Step 20 - Review Business Dealings, Trusts & Shares

Last updated: June 2019

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Why is this important?

This step’s objective is to help you determine what options are available where the deceased person owned a business, shareholdings or held key roles. You may want to appoint yourself as the Executor as the interim business owner until the estate is fully administered or hand-over the operation to someone.

 

simplyEstate is here to help with the process. Contact us via email or book a first free phone appointment.

Approximate Effort & Cost

Reading: 20 mins
Completing: 1-3 hrs
Total: 1:20-3:20 hrs
Cost: $0

Effort and cost are general estimates only and are based on the assumption that you complete this step without specialist help.

Instructions

To find out how this Process Guide works, access the instructions here.

Glossary

To find out what the capitalised words mean, access the glossary here.

Forms

Close Business (ASIC)

Form 520Declaration of solvency
Form 6010Application for voluntary deregistration of a company

Other forms not listed here may be required based on your specific circumstances.

Legislation

No Partnership Agreement
PARTNERSHIP ACT 1895 (WA) Section 40 (Austl.) (accessed 4/9/2018)

 

Appoint New Director
CORPORATIONS ACT 2001 (Cth) Sections 201F (Austl.) (accessed 5 Sep 2018)

 

Transfer of Shares
CORPORATIONS ACT 2001 (Cth) Section 1072A (Austl.) (accessed 5 Sep 2018)

 

Close Business
CORPORATIONS ACT 2001 (Cth) Section 494 (Austl.) (accessed 7/11/2018)
CORPORATIONS ACT 2001 (Cth) Section 601AA (Austl.) (accessed 7/11/2018)

No Partnership Agreement
PARTNERSHIP ACT 1892 (NSW) Section 33 (Austl.) (accessed 4/9/2018)

 

Appoint New Director
CORPORATIONS ACT 2001 (Cth) Sections 201F (Austl.) (accessed 5 Sep 2018)

 

Transfer of Shares
CORPORATIONS ACT 2001 (Cth) Section 1072A (Austl.) (accessed 5 Sep 2018)

 

Close Business
CORPORATIONS ACT 2001 (Cth) Section 494 (Austl.) (accessed 7/11/2018)
CORPORATIONS ACT 2001 (Cth) Section 601AA (Austl.) (accessed 7/11/2018)

No Partnership Agreement
PARTNERSHIP ACT 1958 (VIC) Section 37 (Austl.) (accessed 4/9/2018)

 

Appoint New Director
CORPORATIONS ACT 2001 (Cth) Sections 201F (Austl.) (accessed 5 Sep 2018)

 

Transfer of Shares
CORPORATIONS ACT 2001 (Cth) Section 1072A (Austl.) (accessed 5 Sep 2018)

 

Close Business
CORPORATIONS ACT 2001 (Cth) Section 494 (Austl.) (accessed 7/11/2018)
CORPORATIONS ACT 2001 (Cth) Section 601AA (Austl.) (accessed 7/11/2018)

No Partnership Agreement
PARTNERSHIP ACT 1891 (QLD) Section 36 (Austl.) (accessed 4/9/2018)

Appoint New Director
CORPORATIONS ACT 2001 (Cth) Sections 201F (Austl.) (accessed 5 Sep 2018)

 

Transfer of Shares
CORPORATIONS ACT 2001 (Cth) Section 1072A (Austl.) (accessed 5 Sep 2018)

 

Close Business
CORPORATIONS ACT 2001 (Cth) Section 494 (Austl.) (accessed 7/11/2018)
CORPORATIONS ACT 2001 (Cth) Section 601AA (Austl.) (accessed 7/11/2018)

Legislation shown may not be comprehensive and other legislation and rules may apply to your specific circumstances.

20.1 Overview

If the deceased person had their own business, held shares of businesses, had a trust or held positions on boards of companies you will need to:

  • determine all business and other dealings the deceased person had;
  • inform those businesses of the death;
  • understand the extent to which the deceased person was involved in those businesses; and
  • put in place the necessary measures.

Contents
20.2 Types of Business Structures
20.3 Role of the Deceased Person
20.4 Constitution, Partnership Agreements and By-Laws
20.5 Company Assets and Liabilities
20.6 Continuing the Business Through Succession
20.7 Selling Shares
20.8 Closing the Business
20.9 Actions and Decisions to Complete Step

20.2 Types of Businesses Structures

In Australia the four recognised business structures are:

20.2.1 Sole Trader

An individual who operates a business under their own name and are personally liable for all aspects of the business. Staff can be employed, and the income generated from such a business is treated as personal income of the owner.

20.2.2 Company

A separate legal entity that has shareholders and Directors. Staff can be employed, and the income generated from such a business is treated as business income.

20.2.3 Partnership

A group of people or entities who join forces to run a business together. They are jointly and individually responsible and liable for all aspects of the business. Staff can be employed, and the income generated from such a business is treated as personal income by each partner.

20.2.4 Trust

A separate legal entity that has a trustee who manages the trust and distributes the trust’s proceeds to the Beneficiaries.

20.3 Role of the Deceased Person

There are numerous ways a person may have been involved or been part of business activities. A person may have multiple such roles with the same or different companies as well.

20.3.1 Shareholder and Business Owner

The deceased person may have been a shareholder of a public or private company such as a Proprietary Limited or Limited company. A shareholder is also often referred to as member or owner of a company.

 

The main document that proves a person’s ownership of parts or an entire business is a share certificate.
For publicly listed companies that are listed on the Australian Stock Exchange (ASX), the deceased person has either had to invest using a trading company, investment fund or used an investment account to trade shares themselves. You should be able to find documents in relation to the investments or statements showing the value of the investments. It is critical to attain the total value of the holdings.

 

For private companies such as a Proprietary Limited (Pty Ltd), Limited (Ltd) or Partnership you can order a share certificate for a fee from the Australian Securities and Investment Commission (ASIC).

 

Strict rules apply to Owners and Directors of companies including accurate record keeping, lodging quarterly Business Activity Statements (BAS), paying annual review fees to the Australian Securities and Investments Commission (ASIC) and submitting annual tax returns to the Australian Taxation Office (ATO). You should inform yourself about who takes care of these activities if the deceased person owned a business or other legal entity.

 

The total value of the investments can be added to the simplyEstate Assets & Liabilities Inventory by the Executor, Administrator or Next of Kin if not already covered through the bank accounts as outlined in Step 19 – Deal with Banks & Finances.

20.3.2 Business Manager

The deceased person may have been managing the day-to-day operation of their own or someone else’s business. They may have called themselves director, managing director, Chief Executive Officer or another title. It is important to look for emails or documents that state the business name and check what title was used to help determine who to notify of the death to ensure that any responsibilities and duties will be taken care of in the deceased person’s absence. In such positions it is common to being paid or incentivised with share plans that may form part of the deceased estate.

20.3.3 Board Member

The deceased person may have been a member of one or more boards. Often boards exist in companies, clubs and strata (apartment buildings or townhouses) and the three key positions are those of the Chairman, Secretary and Treasurer.

 

It could be that the deceased person held one of these roles on a board and you can inform the board of the death, so the remaining board members can take the necessary steps as governed by their constitution, by-laws or other rules.

20.3.4 Partner

The deceased person may have been a partner to a partnership, commonly in professional services such as law and accounting.
The other partners will need to be informed of the death, so that the necessary steps can be taken as per the partnership agreement if one is in place.

 

Where no partnership agreement is in place and depending on your State/Territory, the following applies:

If no partnership agreement is in place between the partners, the partnership dissolves with effect from the date of the death or bankruptcy.

 

Relevant Legislation

PARTNERSHIP ACT 1895 (WA) Section 40 (Austl.) (accessed 4/9/2018)

If no partnership agreement is in place between the partners, the partnership dissolves with effect from the date of the death or bankruptcy.

 

Relevant Legislation

PARTNERSHIP ACT 1892 (NSW) Section 33 (Austl.) (accessed 4/9/2018)

If no partnership agreement is in place between the partners, the partnership dissolves with effect from the date of the death or bankruptcy.

 

Relevant Legislation

PARTNERSHIP ACT 1958 (VIC) Section 37 (Austl.) (accessed 4/9/2018)

If no partnership agreement is in place between the partners, the partnership dissolves with effect from the date of the death or bankruptcy.

 

Relevant Legislation

PARTNERSHIP ACT 1891 (QLD) Section 36 (Austl.) (accessed 4/9/2018)

20.3.5 Trust

The deceased person may have been a trustee (owner) or a Beneficiary (a person who benefits from the trust in form of income) of a trust. The Executor, Administrator or Next of Kin should inform the owner of the trust and the other trustees, if applicable, or the beneficiaries of the trust of the death. This will allow the necessary persons to take the actions needed to resolve the issues surrounding the death and how the trust continues to operate moving forward.

20.3.6 Signatory

The deceased person may have been a signatory to a company, club or trust bank account. If the relevant company, club or trust has other signatories these should be informed so that a new signatory can be appointed and deal with the relevant bank or financial institution.

a telephone handset to indicate that our users can make a phone consultation booking simplyEstate is here to help. Contact us via email or book your first free phone appointment.

20.4 Constitution, Partnership Agreements and By-Laws

In the cases listed above it is advisable to request a copy of the governing document such as the company constitution, partnership agreement, by-laws or other forms of rules and contracts. This will allow you to familiarise yourself as an Executor, Administrator or Next of Kin with any administrative work that is required of you, what type of work may need to be continued or how to cease operation altogether.

20.5 Company Assets and Liabilities

You should note that company, partnership and trust assets and liabilities may form part of the estate depending on the legal structure. It is important to remember that sole traders and partners generally are fully liable for any debts, which may be accessed from the deceased estate. The decision to continue the business, transfer its shares to beneficiaries or to wind-up the business should only be made after seeking appropriate advice.

20.5.1 Sole Trader

As a sole trader, all assets and liabilities of the company form part of the deceased person’s estate. This means that everything forms part of the estate and needs to be included in the simplyEstate Assets & Liabilities Inventory.

20.5.2 Company

Assets and liabilities of a company belong to the company. However, the deceased person may have full or partial ownership of that company and hence parts of the assets and liabilities may fall within the estate. The portion of company assets owned by the deceased person should be listed in the simplyEstate Assets & Liabilities Inventory.

20.5.3 Partnership

Assets and liabilities of a partnership belong to the partners equally or as agreed in the partnership agreement. Some assets and liabilities of the partnership may fall within the deceased estate and should be in included in the simplyEstate Assets & Liabilities Inventory.

20.5.4 Trust

Depending on the agreement, some assets and liabilities form part of the deceased estate and should be listed in the simplyEstate Assets & Liabilities Inventory.

 

There may also be future income distribution to the deceased person and those may need to be noted as these may be redirected to Beneficiaries of the deceased estate.

20.6 Continuing the Business Through Succession

If the deceased person was the owner of the business and was also the sole owner and sole director, then the Executor or Administrator may appoint a new director. This can be done before all shares are transferred to the beneficiaries of the deceased estate, who then appoint a new director, to ensure the business can continue to run during the deceased estate administration process.

 

Relevant Legislation
CORPORATIONS ACT 2001 (Cth) Sections 201F (Austl.) (accessed 5 Sep 2018)

 

If the deceased person was not the only owner or director of the company, then the remaining owners and directors can take the necessary steps to maintain the ongoing operation of the business. The shares of the deceased person may transfer to the Beneficiaries as part of the deceased estate administration process.

 

The Executor or Administrator will be able to elect to be the holder of the shares or transfer the shares to another person. That person will then assume the same entitlements as the deceased person did depending on the class of shares and rights attached to them.

 

Relevant Legislation

CORPORATIONS ACT 2001 (Cth) Section 1072A (Austl.) (accessed 5 Sep 2018)

20.7 Selling Shares

If the Beneficiaries of the deceased estate do not want to own part of the business, the shares may be sold to the other owners and directors or to a member of the public. It will be important to review the constitution or partnership agreement to find out who the shares can be offered to for sale and in what order.

20.8 Closing the Business

If the Beneficiaries of the deceased estate have already decided to close the business, then either the process of winding up the company or a sale process may be started.
You can wind-up and deregister a company voluntarily by following the below process:

 

Australian Securities and Investments Commission (ASIC)
Post: Australian Securities and Investments Commission, PO Box 4000, Gippsland Mail Centre VIC 3841

 

You can wind-up and deregister a company:

  • Online; or
  • by Post by completing and submitting the below forms.

Relevant Documents

  • Form 520Declaration of solvency; and
  • Form 6010Application for voluntary deregistration of a company.

Relevant Legislation
CORPORATIONS ACT 2001 (Cth) Section 494 (Austl.) (accessed 7/11/2018)
CORPORATIONS ACT 2001 (Cth) Section 601AA (Austl.) (accessed 7/11/2018)

 

Note: simplyEstate strongly advises to seek specialist legal, tax and/or accounting advice for all business dealings to not negatively impact the deceased estate.

20.9 Actions and Decisions to Complete Step

If you would like a little help from us at simplyEstate with this Step, you can email us or book your free first phone appointment. If you would like specialist help, get in touch with one of our Specialist Partners listed in the yellow section to the right or below and see how they can help.

 

If you have decided to tackle this Step yourself after reading and understanding this Step, you may want to:

  1. Determine if the deceased person was a sole trader, owner, partner or shareholder of a company or partnership;
  2. Establish if the deceased person held director (or equivalent) or board positions and inform the necessary persons to ensure duties are taken on by the best placed;
  3. Check the relevant constitution, partnership agreement, by-laws or other types of contract and rules to determine the procedures after a death;
  4. Check and verify share certificates and the current value;
  5. Appoint the Executor or Administrator as the interim director (or equivalent) to continue business operations (if applicable);
  6. Check the Will (if available) about any specific instructions about how the business (or equivalent) are to be managed after the death;
  7. Discuss and agree with the Beneficiaries if the business (or equivalent) will be closed, sold or handed over;
  8. Transfer the signing authority the deceased person had (if applicable); and
  9. Update the simplyEstate Assets & Liabilities Inventory with all shares and company assets that belong to the deceased person.

Once you have completed all the necessary actions and decisions, you can move on to the next Step by clicking below or save progress at the top.

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