The untimely death of a business owner is just one of those subjects you don’t want to broach really isn’t it? It might be a bit of a morbid topic to touch upon but unfortunately, it’s one that needs covering.

You can use the Tell Us Once service to report a death to multiple government agencies in one go (although this doesn’t include Companies House, so you’ll need to do this separately).

You can still contact HMRC directly if you need help, and they will also let you know what to do about submitting a tax return for someone who has died.

In the event of a sole trader passing away, the business essentially dies with them. Their business isn’t legally separate from them personally, so any assets (or liabilities) that the sole trader owned will automatically become part of their estate when they die.

Assets can be sold to clear any debts or outstanding balances, such as loans, mortgages, employee wages, or unpaid invoices. Anything that’s left will go to the beneficiaries of their estate.

A business partnership will normally dissolve on the death of one of the partners. Hopefully there will be an up-to-date partnership agreement in place which addresses what happens to any assets or profits in the event that one of the partners dies.

If there isn’t an agreement in place, their share of the partnership’s assets will become probate property and pass to any beneficiaries of their estate. If it’s financially viable to do so, the remaining partner(s) might decide to make an offer to buy the portion which belonged to the person who died, but ultimately it’s up to the person (or people) who inherit to decide what happens to it.
 

A limited company is a separate legal entity in its own right, so the death of a director or shareholder can be a bit more complicated. In general, it’s worth noting the difference between a shareholder and a director. A shareholder owns a share of the business personally, and these shares will form part of their estate. A director is responsible for running the business.

It’s well worth checking the most recent Articles of Association relating to the company. These are basically the written rules that a company uses to explain what powers directors have, and what the shareholders are entitled to.

So, how can you make sure you’re prepared… just in case?

• Invest in a good life insurance plan – this will be a massive financial relief for those left behind
• Set out clear contracts while you’re alive and well, and have everything witnessed or approved as needed

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