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Death of co director and sole shareholder

What happens to the accounts and shares of the company?

Hello,

I have just been informed of the death of a limited company contractor. He was the sole shareholder of the company and made his wife is a co director - although she didnt perform any active roles for the company.

Due to his death, the wife (who is also a director) would like to close the company. I need advise with the following, pls

1. what happens to any money left in the company's bank account

2. it will be difficult to prepare the company's final accounts and corporation tax return as the wife does not know the company's income and expenditure. what is the best way to deal with this?

3. Can the wife transfer the share to herself? 

Thank you for your positive advice on this

 

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19th Jun 2018 18:37

You need to speak to an accountant and to the deceased's executor.

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19th Jun 2018 20:56

Is there anyone that can give a constructive advise ?

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to Newacct06
19th Jun 2018 21:16

Quote:

Is there anyone that can give a constructive advise ?

Which bit of "speak to an accountant and to the deceased's executor" isn't constructive? How else do you suggest accounts might be prepared and a deceased person's property be transferred to their heirs?!

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By Matrix
to Accountant A
19th Jun 2018 21:26

The OP is an accountant and is asking an accounting question so if you are able to help then please guide the OP by saying what you would do if you were the accountant.

I don't know the answer and, I would like to think that, when I don't know the answer I too can come on this forum and ask for help.

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to Matrix
20th Jun 2018 00:15

Quote:

The OP is an accountant ....

The question was posted anonymously.

Quote:

1. what happens to any money left in the company's bank account

Nothing. The company survives. Might be an issue if the deceased was the only signatory ....

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2. it will be difficult to prepare the company's final accounts and corporation tax return as the wife does not know the company's income and expenditure. what is the best way to deal with this?

Are there some records, complete records or no records? You can only use what is available. This will either be sufficient to construct accounts that you reasonably believe are materially correct. Failing that, you can admit that, in the absence of input from the deceased, it is not possible to produce anything which is sufficiently robust.

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3. Can the wife transfer the share to herself? 

No, the wife cannot seize the share or any other of the deceased's property. The deceased's executor is responsible for distributing the deceased's assets in due course, in accordance with any will or intestacy provisions.

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20th Jun 2018 10:15

I think this highlights the problem of posting anonymously. The OP's questions - particularly the 3rd, didn't suggest that Newacct was a qualified accountant. And therefore Accountant A's response was perfectly reasonable. Now that has been clarified 'AA' has given more helpful advice. But it still suggests that Newacct may be best advised to pass this on to someone with more experience, particularly if the figures are significant.

Thanks (1)
20th Jun 2018 10:16

I think this highlights the problem of posting anonymously. The OP's questions - particularly the 3rd, didn't suggest that Newacct was a qualified accountant. And therefore Accountant A's response was perfectly reasonable. Now that has been clarified 'AA' has given more helpful advice. But it still suggests that Newacct may be best advised to pass this on to someone with more experience, particularly if the figures are significant.

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20th Jun 2018 12:42

Thank you for all your feedback.

Please let us not be quick to judge and criticise posts. It is not helpful and serves no purpose

I tried to keep my post short and concise, to make it easier to read, but it appears this has created some confusion.

Firstly, this is a one man ltd company contractor.

Ofcourse the company survives, but I did write that the spouse who is a co-director wishes to close the company as there is no longer any use for it.

Normally, when a director wishes to close down a company, we would prepare a final accounts & CT return. Whatever is left after tax will be drawn as capital distribution, bank account closed and company dissolved.

This is not a normal situation, as it will be difficult to prepare meaningful accounts due to lack of information. The only way forward that I see with this is to go ahead and close the company without producing a final account.

1. What happens to any money left in the company's bank account? We are not talking about a large amount of money, but money left in the bank account is lost to the state when a company is dissolved. The deceased was the sole signatory of the bank account. So what is the best course of action? Treat this as capital distribution and transfer to their estate, before closing the account?? Or would you treat it differently?

2. What happens to company accounts? Go ahead and close the company without submitting final accounts? Or would you handle this differently?

3. The shares? As said, this is a contractor company, & the shares are hardly worth anything. The normal approach would be to value the shares and transfer this to their estate. The question is, is it worth going through this process for shares that are not worth anything? How would you handle this?

I am going to echo Matrix response, and would appreciate only beneficial advice.

Thank you

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to Newacct06
20th Jun 2018 13:57

1. Executors/personal representatives are now the shareholders.
2. They can appoint additional directors if needed but in a ny case...
3. The director holds a meeting with themselves, decides to put them selves on the mandate, writes to the bank and becomes a signatory
4. Director obtains bak statements from bank and gives them to accountant
5. Accountant prepares accounts and proposes closure process
6. Assets are distributed to creditors and remains to shareholders, forming part of the estate. Account is closed
7 . Estate is distributed to beneficiaries

Is that so hard?

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to WhichTyler
20th Jun 2018 14:09

Thank you for your response WhichTyler.

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to Newacct06
20th Jun 2018 17:28

But also note KK's advice "it still suggests that Newacct may be best advised to pass this on to someone with more experience, particularly if the figures are significant."

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