Six ways an advisor can help administer your estate with a business

When a loved one passes away, managing their estate is often a challenging task. And if that estate includes a business, those hurdles are amplified.

As an estate trustee, you might find yourself juggling the complexities of keeping the business running, meeting the wishes of the deceased, and making critical financial decisions.

Here’s the good news: you don’t have to do it alone. The right advisor can help you navigate the process, making sure the business and estate are managed smoothly, responsibly, and in line with the wishes of your loved one.

Here are six valuable ways an advisor can help you administer an estate than includes a business:

1. Understanding the deceased’s intentions

As the estate trustee, your first step is to develop a clear understanding of what the deceased wanted to happen with their company. Did they want the business sold? Wound down? Passed on to a specific beneficiary?

One of the key factors in successfully administering an estate that includes a business is the presence of a well-crafted will, and in some cases, a secondary will. Typically, the primary will covers the distribution of personal assets, while a secondary will can be used to address the business, keeping it separate from the rest of the estate. This separation can help avoid unnecessary probate fees, simplify the administration process, provide clear guidance on how the business should be handled.

The right partner can help you review the will and any other relevant documents to accurately interpret the instructions. Whether it’s sorting through complex directives or handling unplanned and / or unclear scenarios, an advisor can offer the guidance you need to make informed decisions that honour the wishes of the deceased.

2. Managing business operations in the interim

In some cases, the business will need to continue operating while decisions are made about its future. This interim period can be stressful, with responsibilities like managing payroll, maintaining employees, and complying with ongoing financial obligations.

An estate trustee can delegate the task of running the business to a third-party advisor who can act in the best interest of the estate and its beneficiaries. From overseeing daily operations to managing cashflow and dealing with creditors, a seasoned advisor can help stabilize the business, helping to prevent any disruptions that could impact its value.

Additionally, delegating business operations to a partner can make sure that any potential conflicts of interest resulting from the same person administering both the estate and running the business is avoided.

3. Valuing and preparing the business for sale

If the goal is to sell the business, ensuring it’s properly valued is critical for maximizing the estate’s benefit. A business valuation team can assess key factors like cashflow, market conditions, and industry trends to provide an accurate valuation.

In addition, these third-party advisors can help you strategically position your business for sale. Often, they’ll have access to a suite of other solutions, including marketing and business brokers, so you’ll have guidance every step of the way to secure the best possible outcome.

4. Navigating legal, financial responsibilities, and family disputes

Handling an estate with a business can involve a variety of legal and financial responsibility, from settling outstanding contracts to filing tax returns and meeting regulatory requirements. These tasks can be overwhelming for you, but an advisor will be equipped to manage them efficiently.

By guiding you through these complex, yet important, duties, a third-party can ensure all the obligations are met, keeping you compliant and helping you confidently fulfill your role as estate trustee.

One of the most challenging aspects of administering an estate that includes a business can be managing family disputes. Differences in opinion on how the business should be handled, emotional ties, or disagreements over the interpretation of the deceased’s wishes can lead to conflict among the beneficiaries. These disputes can stall the administration process and even threaten the viability of the business.

By engaging an experienced advisor, you won’t need to handle these delicate situations on your own. They will offer objective advice and help to keep the process moving forward. If the matter ends up before the court, a seasoned profession will do what they can to protect the estate and its beneficiaries.

5. Handling conflicts of interest and delegation

It’s not uncommon for estate trustees to face potential conflicts of interest, particularly when the same person is responsible for both the estate and the business. To navigate this, you may want to consider delegating the business tasks to a third party.

An advisor can step in to manage the business impartially — in the best interest of both the estate and the business. They can provide clean, unbiased support to avoid conflicts and streamline the process.

6. Selling or winding down the business

Ultimately, the business will either be sold or wound down, depending on the deceased’s instructions and the needs of the estate. The right advisor can help you effectively handle each scenario.

If selling, an advisor can help you manage the entire process — from valuation and marketing to negotiation and closing the deal.

If winding down is the best option, an advisor can help you responsibly close the business, providing experienced guidance on everything from liquidating assets to settling debts, making sure the estate’s goals are met seamlessly.

Planning for the future

According to CPA Canada, the largest transfer of generation wealth is slated to occur in the next few years, with about $1 trillion changing hands by 2026. In short, having a clear succession plan has never been more important — especially when a business is part of the estate.

An advisor can help you create a robust succession plan that outlines the next chapter of the business based on the wishes of the deceased. These knowledgeable professionals provide tailored succession planning services, from developing the plan itself to updating it as circumstances change. By engaging a third party sooner rather than later, you can help preserve the future of the business, making the estate administration process more efficient and effective when the time comes.  

Are you ready for help?

Administering an estate that includes a business can be complicated endeavour, but you don’t have to do it alone. With the right support, this process can be managed effectively, protecting the value of the business and fulfilling the wishes of your loved one.

Our Estate Solutions team is ready to provide the knowledge and guidance you need at every stage of the process, making a challenging time a little easier. Reach out today to learn more about how MNP can help you administer an estate with a business with confidence.