Businesses & Royalties

All of the issues that one faces upon the death of a loved one are similar to the ones that one faces with a business:

• Tangible assets need to be appraised and possibly liquidated
• Business assets will need to be distributed if the business will not continue after your death
• Any outstanding loans to the business may be called, with an expectation that they will be paid immediately
• Taxes need to continue to be filed and paid, if necessary, until the business is dissolved

To facilitate this, you will need to make a list of everything that needs to be addressed and/or closed out, such as:

• Company accounts, including loans
• Outstanding accounts receivables
• Accounts payables
• Computers and the company files (including, erasing sensitive information prior to      disposing of equipment)
• Building leases
• Equipment leases
• Inventory
• Employees and/or retirees - income and/or retirement benefits

If the intent is that your solely-owned business will continue after your death, it is critical that you designate someone to legally take charge of post-death business affairs. 

Your family should be appraised of that person and any legal agreements regarding the succession - a copy of the document would be best. Also, ensure that the family has some idea of the business' current financial situation. They needs to be aware of future changes that would impact them directly, including future equity ownership, distributed assets, and liabilities.

If you have a business partner, you will hopefully have a legal contract on the disposition of the business and its assets upon the death of one of the partners/owners. 

You will need to ensure that this is very explicit with respect to how the other owner(s) will compensate the family  you leave behind for your share of the company's  value.

Again, your lawyer and your family should have copies of these arrangements, and the documents need to be current. 

If you receive royalties for your work, remember that the royalties continue after your death. 

If you are an author, musician, actor, painter, photographer, songwriter, engineer or inventor with patents, this applies to you and all the other creative and innovative professionals who collect royalties, regardless of the field (from windshield wipers to medical devices). 

With your lawyer and financial planner, you should be looking at various options, including:

• Having the royalties go to one or more family members
• Establishing a trust to which royalties can be directed
• Identifying a charitable organization to whom these should be directed

All of this needs to be clearly addressed in your will. Work with your lawyer or financial advisor to ensure that these are appropriately directed after your death. 

We have included links to other resources for more information below.

In conclusion, nothing will tear a family or business apart as quickly as arguments over money. Having the distribution of any assets clearly and legally established prior to your death is a blessing for those you leave behind.