If the sole trader owned and managed the business themselves and had no business partner or employees, it may be that the business has no value on death. However, many businesses operating as a sole trader can have employees and a value but it may not always be possible for family members or executors to carry on the business after death.
Firstly, as the business assets will form part of the estate of the deceased, the business assets will pass in accordance with the sole trader’s Will or under the rules of intestacy if there is no Will. The beneficiaries under the terms of the Will or intestacy may not be the ones who wish, or have the skills, to continue the business.
Secondly, any business accounts will be in the name of the deceased so as soon as the death is registered with any bank or building society, the business accounts will be frozen pending probate being obtained. If there are employees or suppliers to be paid, who will pay them in the intervening period?
A grant of probate may take months to obtain as all assets need to be valued, and in the case of business assets, this can be complicated. It is possible to apply for an emergency grant of probate known as a grant ad colligenda bona to enable a business to be carried on before a full grant but the stress of this might be avoided if planning is undertaken early enough.
Steeles Law’s Private Client and Business Law teams work together to put in place succession planning for business owners to ensure that families are protected if a sole trader dies when it is anticipated that a business will pass to the next generation.
If you would like any further information regarding any of the points raised in this article or have further questions for our private client and business law teams please do not hesitate to contact us by emailing firstname.lastname@example.org or calling 01603 598000. Appointments are available at our Norwich, Diss and London offices.
*The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.