Wills for Sole Directors
When the sole director of a company dies, then the person nominated in their will to obtain probate (the executor) willstep in or appoint someone else as the director of the company. (Section 701F Corporations Act 2001). The company can then continue to run. Documents can be signed. Bank accounts accessed.
The beneficiaries cannot take over; as until the beneficiaries are the owners of the shares in the company they have no power.
In some professions additional care is required when nominating an executor. For example, in real estate only certain persons can manage a trust account. If the deceased director was that person and the executor does not have the necessary qualifications to manage a trust account, then the business will be paralyzed and executor will have to resolve that issue in some other way. A sole director should consider this aspect of business continuity when putting together the estate plan.
But what happens when a person dies without a will? In most cases a family member will step in and apply to the court to administer the estate. But this will take time, require the approval of the court and until that has been done, the company will be without a director. This could paralyze or even destroy the business carried on by the company.
When a sole director loses mental capacity during their lifetime and cannot carry on as a director, then their personal attorney cannot just step in as a director. However, a person can as a member exercise voting power and make an appointment through powers given in an enduring power of attorney (EPOA).
In summary, the only way to avoid these issues if you are a sole director of a company is to make a will after careful consideration of who your executor will be and put in place an EPOA. Estate planning is both about the distribution of assets and planning for their preservation.