Any entrepreneur should be aware that the lack of appropriate decisions on the inheritance may have negative consequences for the company built over the years.
As is quite commonly known in the event of the death of a natural person conducting an economic activity, in principle, rights and obligations, as well as assets and liabilities related to his business activity, become part of the succession of such a person and are inherited under will or law. This is a situation that can very often lead to a fairly prosperous company, in the course of succession procedures, and often family disputes in this area, to lose contractors, expire contracts, and trading assets will be destroyed, lost or otherwise lost.
If an entrepreneur who is a natural person would consider preparing for the notary documents relating to the description of the company for the purposes of drawing up a will in the form of a notarial act with a recovery record including a specification of the rights and obligations, assets and liabilities of the company, which will become obsolete by the date of opening the inheritance, it is better to consider setting up a company.
A very good solution for the entrepreneur is the possibility of transforming the business into a Polish limited liability company., but not all entrepreneurs want to keep full accounting and reporting. Some also fear taxation at company level and then at partner level.
Another solution may be the creation of a personal company (even with the involvement of a loved one as a partner), which is transparent tax and the taxpayers are only partners. It is necessary to prepare the articles of association in such a way as to include appropriate solutions in the event of the death of the shareholder and the entry into his place of heirs.
You can also use the solution of drawing up a will in the form of a notarial act and including a recovery record for the company being conducted.
As the Supreme Court pointed out in the ruling dated 2 June 2017 reference no. II CSK 722/16: „In order to identify an undertaking as a particular type of thing in the market, it is not relevant to the entity’s circumstances, namely that all rights to its components must be attributed one to a natural or legal person, but such an association as has already been mentioned, that they are all used for the purpose of carrying out an activity which is characterised by expertise, subjection to cost-effectiveness or sound management rules, self-employed activity, repetition of activities, participation in economic activity, submission to market economy principles.’
This is important if the entrepreneur in his will regulation, if possible, accurately describes his business and entrusts the undertaking to a particular person as part of the recovery record.
At that time, even in the event of a dispute among heirs as to the succession or succession, the company should not cease operations at the time of the opening of the inheritance (i.e.
after the death of the successionor), but by effectively taking over its management by the person to whom the recovery has been made, it will continue to function.
It is true that the description of the company may cause some difficulties, but even if no precise description has been made, a deliberate, functional relationship with the company can be relied on.
As the Supreme Court points out in the judgment cited above: “The creation of a functional definition of an undertaking was linked by the legislator to the introduction into the legal system of such solutions that allow the undertaking to look at it as a whole and to make it a subject of the legal relations involved.
This principle has been explicitly expressed under Article 552 k.c., according to which the activity to which the undertaking is subject covers all that is part of the undertaking, unless otherwise derived from its content or from specific provisions.
It is confirmed by regulations, among others Article 10641-106413 and Article 106414-106423 k.p.c., allowing the execution of an undertaking as a whole, not to particular things and property rights.’
Unfortunately, it cannot be excluded that from the date of drawing up such a will with a recovery record until the date of the opening of the inheritance, the state of the company will change and there will be a dispute as to which elements fall within the scope of the company and some are not. Of course, when it comes to production machinery, there should be no doubt, but in the case of, for example, passenger cars, you can no longer be so sure.
If a natural person would consider preparing for the notary the documents relating to the description of the company for the purposes of drawing up a will in the form of a notarial act with a recovery record including a specification of the rights and obligations, assets and liabilities of the company which will become obsolete until the date of the opening of the inheritance - it is better to consider the establishment of a personal company, to which the company which he/she can contribute, and to provide for immediately in the company contract the rules of succession of the rights and obligations of the partner, thereby eliminating the risk that the company built over the years will cease operations with the death of the entrepreneur.
Author:
Aleksandra Księżyk
Director of the Legal Department in Warsaw. Legal advisor, from 2013 associated with Russell Bedford. He runs the Legal Department at the Chancellery Russell Bedford. He has many years of experience in working in Warsaw Law Firms mainly for medium and large enterprises, but also for companies of the State Treasury.
In her practice, she dealt with legal and administrative proceedings, as well as the creation of various types of contracts, including elements of intellectual property law, agreements, regulations, internal documentation, as well as purchasing.
However, the main area of practice and interest is commercial law and business transformation processes with elements of tax and balance sheet law. He prepares and then implements and conducts merger, division and transformation processes, as well as the creation and elimination of entities.
In the field of proceedings, he shall develop procedural or negotiated strategies. It implements custom projects and implements custom solutions, prepared according to individual customer needs. The author of articles on mainly aspects related to transformation processes.