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How to appoint heirs to a business during the life of its owner

25.03.2021

There are only two real guarantees in life. What we are. And the fact that we will not be. The exact timeframe for both options is unknown.

Therefore, it is worth taking care of what happens to the business after the death of the owner in time.

Dangers to business after the death of the owner

  • Business shutdown.
  • Lack of case management.
  • Business fragmentation between heirs. And it is not a fact that they will agree among themselves.
  • The heirs do not know how to do business.
  • The heirs disagree on how to do business.

Other factors may arise. Even one of them will be enough to destroy the business very quickly.

Business protection mechanisms

According to statistics, about 60% of company owners want to protect business as the main family asset. Only 7% of them have a specific plan for resolving the issue. Lawyers explain what scenarios and mechanisms can be used to delegate authority.

Preparing the business for a possible transfer


Disputes between heirs and partners are one of the main risks for a business after the loss of an owner. To avoid such a problem, the owner should:

  • predetermine plans for the distribution of shares;
  • decide on the choice of a manager or a new owner of the business.
Desirable but optional:
  • communicate your plans to potential heirs;
  • listen and discuss possible options for the distribution of powers.

This will help to finalize the handover plan and reduce tensions between relatives after the testament is announced.

If the business is in shared ownership, then it costs extra:

  • to issue the consent of the co-owners and present them with an heir;
  • to structure business assets;
  • to put the title documents in order.

The agreements reached are legally enshrined in will or inheritance contract. They abolish the general inheritance mechanism by law and allow the transfer of property and business to the chosen heir.

Specifics of transferring a business by will

It is convenient to appoint a specific person to whom the owner transfers his business to the will. Anyone can be defined as an heir: a wife, a married or illegitimate child, a partner, a friend, a mistress, a charitable organization, the state. It is possible to distribute property and shares / assets of a business among several recipients.

As a rule, a will is drawn up by a notary. But there are exceptions established by the provision of the Civil Code of the Russian Federation. For example, in the event that a person is in the hospital near death, the head physician can certify the document and hand it over to the notary.

You do not need to tell your heirs or other relatives about the document. The will is executed by a notary.

Other useful features of a will:
  • appointing an heir to receive a business in the event of the death or rejection of the case of the first heir;
  • the will of an asset or business that is not exists, but they may appear;
  • deprivation of inheritance of specific relatives;
  • appointment of an executor - a person who will control the process of registering a business;
  • appointment of a trustee - a person, which will support the business until the heirs take over ownership.

A will is not an immutable document. The owner can change or rewrite it at any time.

Will restrictions

The inheritance by will is limited by the condition of a compulsory share. Regardless of the provisions of the document, retired parents and minor children are recognized as heirs. They receive half of the property that they are entitled to without a will.

To avoid separation from the business of the mandatory share of inheritance, you should arrange the transfer of other property to the family.

Succession agreement

In 2019, inheritance agreements became available in Russia. This document defines the heir, who undertakes to do something in return for the receipt of business or property. The terms of the agreement are discussed by its participants.

This form of transferring a case is convenient when an entrepreneur is ready to inherit a business on specific terms.

For example, a partner becomes the owner of an LLC share. But he undertakes to pay part of the profits or hire family members of the deceased.

Execution of an inheritance agreement is possible only with a notary and in the presence of the parties to the transaction. The terms of the document are also limited by the mandatory share of inheritance, so you need to take care of transferring part of the inheritance to parents and children.

Useful features of inheritance contract

Other interesting options:
  • Possibility of concluding separate agreements with each of the heirs.
  • Possibility of cancellation contract if the testator changed his mind. Moreover, if the heir has already invested any funds, then they should be returned.
  • The possibility of selling or donating the promised business. The deny function in the document does not work.

A succession contract also allows you to define an executor or business trustee about the entry of the heir into rights.


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