Sometimes the most important asset in an estate cannot simply be left untouched while a family resolves its differences.
A substantial part of David’s estate consisted of his interest in a successful family business.
Two of his children worked in the company. A third had pursued a different career and had no involvement in its day to day operation.
Following David’s death, disagreements emerged about what he had intended to happen to the business.
The will provided one answer.
The children who worked in the company said that David had repeatedly promised that they would eventually own it. Their sibling maintained that the value of the business formed part of the inheritance which their father intended to divide fairly between his children.
Potential claims therefore arose concerning both the will and promises made during David’s lifetime.
Those issues could not be resolved overnight.
The business, however, could not wait.
Employees needed to be paid. Contracts had to be fulfilled. Banking arrangements required attention and commercial decisions continued to arise.
Allowing the inheritance dispute to paralyse the company risked destroying part of the value everyone was arguing about.
Separating the dispute from the business
The immediate priority was therefore to establish arrangements which allowed the company to continue trading without prejudicing anybody’s position in the underlying dispute.
Information was exchanged about the ownership structure and value of the business. Interim arrangements were agreed for management and decision making while the inheritance issues were investigated.
That created breathing space.
Once the financial position was better understood, negotiations could focus on the practical question of whether the business should remain with the children who operated it and, if so, how their sibling could receive fair value elsewhere.
The eventual settlement allowed the trading interests to remain together. Other estate assets and structured payments were used to reflect the competing claims.
The business survived.
So did most of its value.
What legal issues arose?
Family business disputes following death may involve:
- The terms of the deceased’s will.
- Proprietary estoppel or promises made during lifetime.
- Ownership of shares or partnership interests.
- Valuation.
- Duties of personal representatives.
- Interim management arrangements.
- The interaction between probate, trust and company law.
What can we learn?
The legal dispute is not always the most urgent problem.
Where an estate contains an operating business, preserving its value may be more important in the short term than determining who is ultimately entitled to it.
A successful strategy therefore sometimes requires parties to cooperate temporarily even while they fundamentally disagree about the final outcome.
Winning an inheritance dispute is of little value if the asset being inherited has been destroyed in the process.
Protect the value of the estate while the dispute is resolved
If an inheritance dispute involves a family business, acting early can be critical. The right interim arrangements can protect the business, preserve its value and give the parties time to resolve competing claims without causing unnecessary commercial damage.
If you are facing a dispute involving a business, shares or other valuable estate assets, contact our inheritance dispute solicitors to discuss how we can help protect your position and the assets at stake.
