What to do if the entrepreneur suddenly dies or has an accident? Particularly in medium-sized companies, there are often hardly any provisions for emergencies.
DR. JOHANNES FIALA
Planning for retirement and generational change, including in the event of a sudden accident or death, are topics in which small and medium-sized enterprises in particular have considerable deficits. According to expert estimates, around 24,000 businesses are at risk each year throughout Germany because of a lack of appropriate regulations.
In a coma
After a car accident, the CEO is in a coma. Providing for such a tragic event is not everyone’s cup of tea. A living will is nevertheless desirable in principle. Powers of attorney for pension provision for the business and private spheres are actually also a must. Particularities apply when dealing with banks that do not accept any form template. If there is to be the possibility of borrowing if necessary, formal requirements must also be observed. If, on the other hand, nothing has been settled, it can take months before a so-called guardian is appointed – by which time a considerable financial loss has usually already been incurred.
If the last will is not handwritten but written on a typewriter, the will is invalid. This can create a community of heirs who can only make joint decisions about anything and everything. For most companies, this means standstill, the beginning of decline. 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.
It becomes particularly delicate when assets abroad come into play. Often it is then no longer just a question of tax issues, but 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. In this way, the settlement in the event of death can be greatly simplified – but only if it has been thought of beforehand.
Estate under guardianship
It happens that the wife, as the heiress, sells everything in silver after the death – even before anyone is interested in the children and their compulsory portion. If the heiress invests the assets poorly, the child will end up with nothing, even before a compulsory share from the estate could be invested in a gilt-edged manner. Here, too, an execution of a will can offer more security.
Families at odds
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. It is important to find the right advisor who is familiar with the instruments of probate law.
If the child has already fallen into the well, there are numerous pitfalls for relatives in the event of the accident or death of the entrepreneur. Making the appropriate requests to the court or authorities is one way to get things moving in a better 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 unclear assets. Establishing an inventory can be very difficult – however, it protects the heir from inheriting nothing but debt economically in the end. Occasionally a widow may also want to make sure that all debts are paid first – even for this there are legal solutions. Such alternative courses of action also need to be developed in individual cases for the precautionary documents and documented for the relatives.
(w.news Sept 2007, 32)
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About the author
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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