Sudden death or accident

For people who invest almost all their assets in a company and family businesses, wealth issues are about preserving substance and targeted asset growth.

This also includes planning for retirement and generational transfer, including in the event of a sudden accident or death. However, there are considerable deficits in the SME sector, the far larger group of entrepreneurs with well over 3 million affected in Germany alone. The consequence, according to experts, is that every year around 24,000 businesses are discontinued. On a completely different note, there are over 35,000 companies whose existence ends through insolvency, often also without effective asset protection in the pension scheme.


Entrepreneur as coma patient:

Making provisions for this tragic eventuality is not everyone’s cup of tea – a living will can be recognised as desirable after the event? Powers of attorney for precautionary measures for the business and private sphere also belong here. Particularities apply when dealing with banks that do not accept any form template. If the possibility of borrowing on demand is to be given, formal requirements must also be observed. If nothing is settled, it can take months before a so-called guardian is appointed – and by then there is usually already considerable damage to the assets.


Entrepreneur without a valid will:

If the entrepreneur writes his last will and testament with a typewriter, this can be enough to create a community of heirs with the death, which can only decide about everything and anything together. The reason for this is that a will written with a typewriter does not comply with the legal formal requirements and is therefore invalid. For most companies, this is when standstill occurs, effectively the beginning of decline and the trigger for losses. The popular Berlin will, in which spouses appoint each other as heirs, is also disadvantageous from a tax point of view in almost all cases.


Entrepreneurs with foreign assets:

It becomes particularly delicate when assets abroad come into play. This often involves not only tax issues but also, above all, the question of which law of succession is applicable so that the last will and testament can also be effective there. Here, solutions and arrangements can be offered via foundations and trusts. This massively simplifies the process in the event of death – but only if you have thought of it beforehand.


Entrepreneur with minor child:

It happens that the wife becomes the heiress, and after the death silvered everything – even before any “guardian” is interested in the children and their compulsory share. If the heiress invests the assets poorly or makes losses, the child will end up with nothing, even before a compulsory portion of the estate has been settled and invested in a gilt-edged manner. Here, too, an execution of a will can offer more security.


Entrepreneur with estranged family:

Wills can lead to years of litigation – especially if the family is estranged. Trust solutions at home and abroad, as well as the execution of wills and family foundations can provide a remedy here. However, it is sometimes difficult to find the right advisor if the tax representative has not become acquainted with the estate law instruments in question during his training and has long since reached his limits, especially if the assets involve a company or a foreign country.


Emergency help:

If the child has already fallen into the well, there are numerous pitfalls for relatives in the case of an accident of the entrepreneur – but also in the case of inheritance. Making the appropriate applications to the courts and authorities is one way to steer things in a more pleasant direction. Often relatives do not know where discretionary powers lie or authorities have to provide support, even though it can involve a lot of work. A typical example is the limitation of liability for heirs in the case of an unclear asset situation. Establishing a net worth inventory can be very difficult – however, it protects the heir from economically inheriting only debts in the end. Or the question arises how to get rid of “inherited debts”? Occasionally a widow wants to make sure that all debts are paid first, there are legal solutions for that as well. Such alternative courses of action also need to be developed in individual cases for the precautionary documents and documented for the relatives.


by Dr. Johannes Fiala


by courtesy of (published in Meistertipp, issue October 2007, page 8)


published in Floors&walls, issue November 2007, page 77, (under the headline:Sudden death or accident horror situation in the company?)


published in Büchsenmacher.Messer und Schere, issue 7/2007, page 10 (under the headline: Sudden death or accident: Horror situation in a family business?)

and (published in Die Zahnarzt-Woche, issue 43/2007, page 27, under the heading Precautions in case of accident or sudden death)

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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