Who Gets What on Death of Businessman?
The death of a successful business man always creates immediate problems for the family. Not only on a personal level but also at a practical level. I was reminded of this last week when we saw the death of one of Romania’s most well-known business men Dinu Patriciu, who died in London aged 64.
Like all successful business men he had interests in many countries throughout the world, including England. The first question was had he planned for succession; had he made a will which would allow the business to function until a successor is appointed. Many leaders of businesses do not plan for the future and a sudden death can be a disaster for their companies.
Romania is a Code Law country and as such the rules of succession are governed by the Codes and the law. When the Napoleonic codes were drafted by Napoleon in the 1800s he was very concerned that the nobility had been at times disinheriting not only wives, daughters and sons but also other relatives. It was for this reason that he proposed the rules of succession now enshrined in the Code rules of Succession. These rules have had unfortunate effects. By insisting on ridged rules of succession in relation to property it has meant that many large estates have over the years dwindled as the land is divided amongst successive generations. So instead of one or two large estates you have a large number of small estates which are in many cases un-economic.
Common law countries have approached the question of succession in a different way. Under the common law (as a general rule) any person of legal age can make a will (“Testator”). A person is assumed to know how he wants his estate dealt with, and the courts will only intervene in certain limited circumstances. The use of a will in common law countries is widespread far more than in Code law countries. The use of a will has been held up as an example of why large businesses are not broken up on the death of the owner.
The law of the will is chosen by the person making it and it can relate to their property anywhere in the world, subject to the laws of the country where the assets are situated. Soa person in Romania can make a will under the English law dealing with his non Romanian assets provided that this is clearly expressed in the will. The property will be divided according to the wishes of the Testator as set out in the will subject to the local law applicable to the assets. It should be noted that if there is no will then the estate of the person who has died is divided amongst his successors in accordance with the rules laid down in the law relating to intestacy. These rules of succession are similar in some ways to those in the Codes.
This means that say in England a Testator can leave all his estate to whomsoever he wants. He can leave his money to a charity without leaving any money to his family, including his wife and children. There is nothing inherently wrong with this on the basis of the law. This means that a husband can leave nothing to his wife and give it to a third party. A father may wish to totally disinherit his children and leave money to their children or a third party.
In England this right to express his wishes has for the Testator been mitigated in certain cases. In the 1970’s there were a number of cases in England where a business man who had built a successful business died and it was then discovered he had illegitimate children or a mistress who he had been keeping. They were left nothing in the will. To mitigate these injustices a law was passed to allow a person who had been maintained by the Testator to apply to the courts for an order that the estate of the deceased make adequate provision for them out of the deceased’s assets. Thereby changing the wishes of the Testator and ousting some of the Testator’s powers. Thus a wife who had been excluded from a will if they could show that they had been maintained by the deceased or had worked with the husband in building up a business could apply for a provision to be made for them out of the will. They can apply not only for themselves but also for their children.
A will can also be attacked by a person who feels aggrieved that they were not in the will if they can show good cause, or if they feel that the Testator was not fully competent to make the will at the time that they did because they may have been unable at that time to form a proper decision. This has been used in the past to attack “death bed wills”.
The making of a will is a very useful way of protecting ones assets on death and ensuring that they go to the persons which you wish to benefit. Like many things in this day and age it can also be abused. This is at least one reason why a will in any jurisdiction is drafted by a lawyer or other qualified person. They must be qualified to draft such a document as they will be in a position to advise on the impact of the will on the Testators estate and family.
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