Do you own a business or part of a business? Have you considered what would happen to the business or your ownership if something happened to you?
The most important family and succession documents for an individual are
- Prenuptial agreement
- Will
- Guardianship or continuing power of attorney (POA)
Marriage ends at the latest on death. Another possible way of ending a marriage is divorce. A prenuptial agreement can regulate which part of the property is subject to the matrimonial property regime and which part is potentially excluded from the matrimonial regime. The extent of the matrimonial property regime may vary depending on the grounds for the termination of the marriage.
In the event of death, it is important to reconcile the marriage contract and the will to ensure the desired outcome. A will can determine what happens to property after death and how it is distributed among family, relatives and/or others. It is possible that the provisions of the Marriage Act and the Succession Code will lead to the desired outcome, but increasingly family relationships are so complex that the outcome cannot be left to the provisions alone. Where the estate includes business assets, a will may depending on the circumstances, help to qualify for the generation-skipping transfer relief for inheritance tax purposes.
In a power of attorney, a person, the principal, determines who will look after his or her affairs and in what way if he or she is unable to do so because of illness, mental incapacity, failing health or similar reasons. The power of attorney may also cover the management of company affairs and the exercise of decision-making powers. The need for representation may be temporary or permanent. When drawing up a power of attorney, it is also helpful to consider possible disqualification situations, for example, if the trustee's assets, such as a business, were to be sold or donated to children. The trustee cannot sell or donate the trustee's property to him/herself or to his/her close relatives – for this purpose, a so-called "disqualified deputy trustee" is needed.
As well as drafting a pre-nuptial agreement, will and/or trust deed, we can help you plan for the transfer of family assets, such as generational transfer of a company or, for example, gifting a summer house to your children.
In addition to the family and estate documents mentioned above, we would like to remind you of the importance of a shareholders' agreement. If there is more than one shareholder in the company, the shareholders' agreement is almost invariably a necessary document.