As has been discussed if you die without a Will distribution of your estate is made more difficult. An executor can begin to administer a deceased estate almost immediately but it takes time for letters of administration of an intestate estate to be granted by a Court. The situation is further compounded if a sole director of a company dies without a valid Will as the company does not have a person who is properly authorised to immediately take over the management of the company.
Multiple Directors
When one of the directors of a company dies the surviving directors continue to manage the company and may appoint a temporary director (pending the appointment of a new director by the company shareholders).
Sole shareholder
If a company has a sole shareholder who dies leaving a will, the directors can continue to manage the company until the shares are transferred to the beneficiaries of the estate.
Sole Director & Shareholder
If the sole director is also the sole shareholder, and dies without a valid Will it creates difficulty for the management of a company. The Corporations Act provides that, in the event of the death of a single director of a proprietary company, the executor or administrator of the deceased’s estate may appoint a new director. Therefore the company can keep running until shares are transferred to beneficiaries of the estate who may then appoint a new director.
Where there is no will a person needs to apply to the Supreme Court for letters of administration to manage the estate which may take months. In this time the company has no one who is properly authorised to act for it, and may be unable to trade. It may be difficult to operate bank accounts with the likelihood that the value of the business (an important estate asset), will be impaired. Equally if the business is to be sold for the benefit of the estate its value may erode if it cannot be sold quickly.
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