Prepare your company for succession

1. Make a will

In a will or testament, you record who will inherit your business. You can also name a business successor. A will helps to settle the inheritance tax more easily and sometimes more favourably. You draw up a will at the notary.

If you do not have a will, the legal inheritance law comes into effect when you die. This determines who your heirs are and what share they each get. All assets and debts of your company are transferred to your heirs.

2. Make an 'entrepreneurial will'

In a will, you arrange the division of your assets and debts after your passing. This division usually takes a while to arrange. To keep your company under proper management during that time, it is wise to draw up an entrepreneurial will. This includes specific instructions about the future of your business. For example, what happens to your shares and whether your business may be sold. A notary can give you advice on drawing up an entrepreneurial will.

It is wise to make a will when you start your company. You can name an executor who will take over running your business after your death.  It is better if the executor is not an heir. This is because creditors can claim that an heir accepted the inheritance by acting as executor. You want to avoid this in case the inheritance turns out to consist of more debts than assets

3. Ensure partnrships can continue

Do you have a vennootschap onder firma (general partnership, VOF) or maatschap (professional partnership)? Then make arrangements to ensure that the partnership does not disintegrate upon your death. To do so, add stipulations to the partnership contract that allow the remaining partners to continue the business (possibly with a new partner). 

You can consider the following arrangements:

Continuation clause

With a continuation clause (voortzettingsbeding) you arrange that the contractual legal relationship between the remaining partners is maintained if you die. The partnership will then not be dissolved.

Survivorship clause

With a survivorship clause (verblijvensbeding), your share is transferred to the remaining business partner(s) in the event of death. They pay your heirs a sum of money equal to the value of that share. 

Allocation clause

With this clause (toescheidingsbeding), the share of the deceased partner is not automatically transferred to the remaining business partner(s). The allocation depends on an agreement between the heirs and the other partners or partners. 

Takeover clause

This concerns assets that are legally owned by one of the partners, but that are used for the partnership. The takeover clause (overnamebeding) stipulates that in the event of the death of a partner, the others have the right to take over the assets that are legally the property of the deceased.

4. Take out a term life insurance policy

With a term life insurance policy you arrange that your dependents receive a benefit for a certain period after you have passed away. This way you ensure that they do not get into financial problems.

For the next of kin of self-employed professionals (zzp’ers) in particular, the financial consequences can be serious. For example, the cost of many living expenses remains the same while part of the income is lost.

5. Business partner insurance

If you work together in a general partnership or another legal form, you form a team. You reinforce each other and you work together on assignments. If your business partner dies, heirs can claim part of the company. The business partner insurance then pays out a sum of money to the heirs, buying out the part of the company that belonged to the deceased, so that the business can continue.

KVK Insurance check

Want to cover yourself against risks you face as an entrepreneur? You can do this with insurance. Check out the KVK Insurance check.

6. Provide an overview

As an entrepreneur, you know everything about your company. But if you pass away suddenly, how does an executor or next-of-kin take care of things? It is useful if they can find administrative information easily. For example, current orders, bank accounts, insurance policies, subscriptions, contracts, and the contact details of your accountant and key advisers.

Keeping clear records helps with this. Also make sure your executor or next of kin can find your passwords for important business accounts in an agreed place. Do not leave your next of kin without the information they need.

7. Bereavement Support Team

Next of kin and business partners can contact the KVK Bereavement Support Team (Nabestaandendesk). Advisers will help with, for example, the deregistration of the deceased from the KVK Business Register. As soon as someone dies, the KVK Business Register is automatically notified via the Personal Records Database (BRP).