Death and Wills with Assets Held in a Company
Company owned assets cannot be gifted by a person’s will. This is because they don’t own the assets, the company does. However, if the person owns the shares in the company these shares can be gifted, as long as not owned as trustee.
Bart calls the property at 123 Smith street ‘his’property. But it is owned by a company of which Bart is the director and sole shareholder. Bart simply ignores the existence of the company in his thinking.
In Bart’s will he leaves 123 Smith street to his friend Millhouse and the rest of his assets to Barney. The property is worth $500,000 and the rest of Bart’s assets are worth $400,000.
What’s the issue?
- Bart doesn’t own that property so the gift toMillhouse is invalid,
- Millhouse gets nothing because of the way thewill is worded,
- Barney gets the shares in the company which owns the property
- If the executors sell the shares in the companythis will trigger CGT.
- Millhouse gets nothing, but Barney gets about$900,000 worth of assets.
- Millhouse might have grounds to challenge thewill.
Moral of the story – understand your ownership structure and act appropriately.
Written by Terryw, estate planning lawyer at www.structuringlawyers.com.au