The Brief for Accountants & Financial Planners
October, 2018

New relationship?

Two minute scenarios...

What happens when a Willmaker has a successful business but only one of the children is interested in it? 

Scenario One... Michael

Scenario: Michael is a widower who inherited his parents' manufacturing business about 20 years ago. He is about to get his Will done.

What's the issue? Michael would like the business to stay in the family and wants to leave it to his youngest daughter Alicia, who works with him. The business is worth about $1.5m with Michael's whole estate worth $4.5m. He has two other daughters.

Solution: Michael can leave Alicia the business via his Will. She would inherit it outright and her two sisters would get the balance of the estate, so they all end up with an equal share.

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Scenario Two... But what if Alicia changes her mind?

Scenario: Michael isn't 100% convinced Alicia would want to keep running the business after he passed away.

What's the issue? Forcing Alicia to take the business doesn't sit comfortably with Michael. 

Solution: Michael's Will is drafted so that Alicia has an option to take it i.e., she is not obligated. If she chooses not to, the business will be sold and the proceeds distributed among all three girls.

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Scenario Three... And if the business goes up in value?

Scenario: The business is currently going very well, and may end up being worth more than one third of the estate value.

What's the issue?  Michael wants to leave his estate equally among his three daughters.

Solution: The Will can be drafted so that if the business is worth more than one third of the estate, Alicia will have to pay her sisters the difference, which can be paid down over time from business profits.

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Irongroup Lawyers - estate planning & business succession planning.
Liability limited by a scheme approved under Professional Standards legislation.

We are very pleased to advise that our lawyer, Robyn Scamangas, is now an accredited Wills & Estate specialist.

She is one of only 84 lawyers out of 22,000 in Victoria, to have earned this accreditation.



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