What happens to your company when you die? Does it die with you? Live on? Who will supervise and pay the staff? Or, perhaps the deceased was a 1-person-show… no staff… does that mean we can just ignore the company? Are there partners? Other shareholders? Was the company incorporated, or was it a sole proprietorship? Or, perhaps the deceased didn’t run his/her own company, but rather played the stock market, meaning there are shares in a few publicly-traded companies. Every scenario is different, so this article will touch on a few of the more common issues.
Sole proprietorship – These companies are usually very small, often times a 1-person-show. Typically, with the death of the owner, the company dies with them. There may well be assets and liabilities which will need to be dealt with, 3rd parties who need to be contacted, staff, customers, unfilled orders… but likely everything will likely be on a smaller scale. The good news is that there’s no corporate entity to dissolve or sell, and any revenue & expenses of the company are included in the deceased’s final personal tax return.
Small, incorporated company – Small doesn’t necessarily make it easy. First thing, find the Minute Book, which might be in the deceased’s office or the lawyer’s office. This will provide a breakdown of the corporate ownership, information about directors and officers and, hopefully, information about how shares owned by the deceased are to be treated. You will need to determine the value of the company, possibly with professional assistance, so that you can determine the value of the deceased’s shares. After probate has been granted, the shares can be transferred as set out in the Minute Book. For instance, they might get sold back to the company at fair market value or for the original purchase price. Or, they might get transferred to other shareholders. Again, the sale price is important. You will need to determine if the deceased owed money to the company, or vice-versa, as this will impact the list of assets and liabilities. Someone may need to be brought in to run the company, especially if there is staff, customers and unfilled orders.
Publicly-traded shares – You will need to determine the value of the shares as of the date of death, so just look up the closing price for each company on the date of death, multiple by the number of shares, and that’s the value. Those are the easy ones. The tough ones are those ancient certificates you find in the safety deposit box, where the company has been bought and sold numerous times, amalgamated with other companies, and the name has been changed. You will need to do some research to find out the current name of the company, or find out if/when the company was de-listed. Researching old companies can be quite a chore. After probate has been granted the shares will need to be transferred to the executor or someone else, which requires you to find out the name of the transfer agent and then fill out a few forms. Sometimes the transfer fee is more than the shares are worth, so you will have to decide if you even want to bother.
Gregg Medwid is the owner and president of Executor Support, a firm based in Coquitlam, British Columbia, with expertise assisting executors and administrators in settling estates. The project management expertise and customer service focus Medwid brings to Executor Support ensures questions are answered and help is given when it is most needed.
This article is in no way intended to substitute for competent legal advice.
Gregg Medwid, Owner
Executor Support
gregg@executorsupport.ca
604-999-2106
http://www.ExecutorSupport.ca
