First Client death

Advice needed

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After 10 years of running my own Practice I've had my first client death. I'm looking for any pointers from those who have more experience in these matters.

The poor fellow took his own life last week. His business partner found him hanging in the workshop and has been suffering with the fallout since.

Limited company 50/50 shareholding, both Directors no other parties. Standard Articles, company formed 3 years ago. Net balance sheet of £100k.

No will so shares will transfer to wife once probate completed which I believe will take some time in the circumstances. 

Do I have to wait for sight of a death certificate to remove him as Director? I'm aware of the 14 day rule and the business partner has seen evidence (unfortunately) that the guy is no longer here with his own eyes so is that enough for me to TM01?

Surviving Director is panicking that the ex-Director's wife will insist on share buyout (NTA is mostly stock not cash) or try and run the business and 'meddle'. The guy isn't even buried yet so I've advised him just to carry on as normal as best he can but to seek legal advice ASAP as beyond my remit.

But to help me (not to advise him) what is the 'normal' course of events when this happens? What powers does the wife of the ex-Director (resisting a Monty Python joke here) have?

Replies (19)

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By Paul Crowley
06th Feb 2021 15:52

You are no longer the tax agent for the deceased, and up to wife who she chooses

There is now only one functioning director who hopefully can operate the company bank account.

Best tell the bank soonest

If you expect conflict, do not act for the widow

She is now just a share holder. Unlikely that her decisions are for the benefit of the company.

She is not a director and as such has no right to meddle and no right to use the deceased's debit card

Get that card canceled

She CAN ask for the company to hold a shareholders' meeting
That is really about all she has the right to do

Stop the existing director from making any promises that he will regret.

Thanks (2)
Replying to Paul Crowley:
RedFive
By RedFive
06th Feb 2021 15:58

Thanks Paul.

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Replying to RedFive:
RLI
By lionofludesch
06th Feb 2021 16:33

Who has the casting vote ?

Hopefully, the Chairman.

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Replying to lionofludesch:
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By Youareatit
06th Feb 2021 16:38

lionofludesch wrote:

Who has the casting vote ?

Hopefully, the Chairman.

A little trick few know about (not in Accounting circles hopefully!)

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Replying to Youareatit:
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By Paul Crowley
06th Feb 2021 16:45

Client director needs to resign as secretary, if he is as such

Thanks (1)
Replying to Paul Crowley:
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By bernard michael
08th Feb 2021 09:58

Paul Crowley wrote:

You are no longer the tax agent for the deceased, and up to wife who she chooses

There is now only one functioning director who hopefully can operate the company bank account.

Best tell the bank soonest

If you expect conflict, do not act for the widow

She is now just a share holder. Unlikely that her decisions are for the benefit of the company.

She is not a director and as such has no right to meddle and no right to use the deceased's debit card

Get that card canceled

She CAN ask for the company to hold a shareholders' meeting
That is really about all she has the right to do

Stop the existing director from making any promises that he will regret.

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Replying to bernard michael:
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By Paul Crowley
08th Feb 2021 10:04

I agree
Definitely worth saying twice

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By frankfx
06th Feb 2021 16:49

Surviving director has control.

If a dividend was anticipated before 5th April.... think twice.

Director needs to seek advice on next steps
..he is protecting his own financial and mental well-being.

Expectations must be managed.

Btw

Good on you for reaching out

Thanks (4)
RLI
By lionofludesch
07th Feb 2021 07:45

How acrimonious do you expect this to be?

Sure - the continuing director should be allowed to carry on unhindered but, equally, if there's value in the company, the widow shouldn't be cheated out of receiving it.

Thanks (1)
Replying to lionofludesch:
RedFive
By RedFive
08th Feb 2021 08:16

lionofludesch wrote:

How acrimonious do you expect this to be?

Sure - the continuing director should be allowed to carry on unhindered but, equally, if there's value in the company, the widow shouldn't be cheated out of receiving it.

I agree. An added complexity is I acted for the deceased who also operated as a sole trader in a separate business. Of course my authority and his business died with him but here will be a tax return to do and I would be suprised if the widow did not ask me to take care of it when the time comes.

The brother in law of the ex-Director rang the surviving Partner and said "he could make this as easy or as hard as he wanted but one way or the other they were going to get what they deserved."

An opening salvo I think. I feel like I'm in the middle of the field between the two trenches though.

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Replying to RedFive:
RLI
By lionofludesch
08th Feb 2021 08:26

Well, if there's conflict, you can't act for both sides.

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Replying to RedFive:
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By Paul Crowley
08th Feb 2021 10:12

Agree Lion
If you are 'fair' both parties will consider you acted for the other.
As a result no clients as they both pick someone visibly in their corner.

Brother in law's comment could be a decision maker

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Replying to Paul Crowley:
RLI
By lionofludesch
08th Feb 2021 10:23

Paul Crowley wrote:

Agree Lion
If you are 'fair' both parties will consider you acted for the other.
As a result no clients as they both pick someone visibly in their corner.

Brother in law's comment could be a decision maker

Brother in law's comments could be interpreted as threatening behaviour. It's nowt to do with him and he needs to back off.

However, that's a side issue.

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By bernard michael
08th Feb 2021 10:03

What is your current agency standing re the company ?? Do you have the right to issue a TM01 or take any actions on it's behalf ??

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Replying to bernard michael:
RedFive
By RedFive
08th Feb 2021 10:36

I act for the Company and remaining Director as covered in my OP. No issue with the authority to file TM01 on Directors instructions was just a case of checking timings.

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By Diana Miller
09th Feb 2021 10:17

My first instinct is to get the surviving director to get legal advice now from a good commercial law solicitor but that of course supposes he can afford to pay for legal advice which I often find is a sticking point. With the other side already indicating they may playing dirty however it may be cheaper in the long run to dig deep and get advice now. My main though on day to day practicalities would be to look at the salary/dividend split and if they were mainly dividends then increasing the surviving directors salary significantly. Depending on the business type I would also look at setting up a new company for the surviving director to trade through. Agreed there will potentially be goodwill and assets to pay for but that is already the case in terms of the share value-would take legal advice first though.

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Replying to Diana Miller:
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By Mr_awol
09th Feb 2021 10:56

Diana Miller wrote:

My first instinct is to get the surviving director to get legal advice now from a good commercial law solicitor but that of course supposes he can afford to pay for legal advice which I often find is a sticking point. With the other side already indicating they may playing dirty however it may be cheaper in the long run to dig deep and get advice now. My main though on day to day practicalities would be to look at the salary/dividend split and if they were mainly dividends then increasing the surviving directors salary significantly. Depending on the business type I would also look at setting up a new company for the surviving director to trade through. Agreed there will potentially be goodwill and assets to pay for but that is already the case in terms of the share value-would take legal advice first though.

The surviving director is, of course, 'working' in the business and as such probably deserves 'more' of the profits, particularly if salaries were reduced to nominal values for tax planning.

However, I believe the correct approach (particularly as the OP has business interest with both sides) is certainly not to advise "increasing the surviving directors salary significantly" as you put it. If the OPs client just goes ahead with that plan without informing the other shareholder then it may increase the chances of a bun-fight over the company shares and if the wife (or more likely brother-in-law) gets a sniff of it being on the accountants' advice then the OP may quickly find himself on the receiving end of threats of legal action from one party or another - in fact perhaps even both.

Personally, i would find out whether the wife of Mr deceased wanted me to act, and if so, whether she wanted to be involved or just sell out. At that stage i would be able to give my stance on acting for one, both, neither, etc but I'd hold off from any actual advice for either until that much had been determined.

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By bendybod
09th Feb 2021 11:03

Sorry that your first client death is such a traumatic one for all concerned. In my experience, the remaining client will almost always try to get as much legal advice as possible from the accountant!
Whilst it is only natural for many of us to want to go "above and beyond", especially in the circumstances (one of my suppliers had an extremely similar experience), laying down exactly what is and isn't within your remit and insisting upon him dealing with a solicitor for legal advice will minimise potential breakdowns in relationship further down the line.
It sounds like potentially there was discord between the directors, or certainly their families, so definitely keep your distance from the other party.
As for the process, others have answered that.

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By frankfx
09th Feb 2021 13:42

Pay a salary and suffer NIC consequences.

Be prepared for other shareholder to request an audit.

Costs and inconvenience are a genuine _££ nuisance.

Solicitor may advise that strategy.

If company was wound up, would new co acquire stock and other assets at a heavy discount,?

Your client needs to consider what would lookd sensible and good for him

And present a case to the shareholder.

To help both sides move forward.

Risk that lawyers, if instructed make , money from a hapless case.

I refer you to.

Jarndyce and Jarndyce.

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