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 a successor for your business. A will also allows you to arrange matters that make the settlement of inheritance tax easier and more cost-effective. A will is drawn up by a civil-law notary.

If you do not have a will, the 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. Draw up an entrpreneur's will

In a will, you arrange the division of your assets and debts after your passing. You should also draw up an entrepreneur's will. This will prevent your business from coming to a standstill after your death. An entrepreneur's will contains specific details about the future of your business. Consider what should happen to your shares and whether your business may be sold. A civil-law notary can advise you on drawing up an entrepreneur's will.

You can draw up an entrepreneur's will when you start your business, but also if you have been in business for some time. In the entrepreneur's will, you can appoint an executor, among other things. This person will manage your business after your death. 

3. Ensure partnerships can continue

Do you have a business with more than 1 partner? Such as a VOF, maatschap, or BV. In the partnership agreement, the articles of association, or the shareholders’ agreement, you can set out how the remaining partners, shareholders, or members will continue to run the business. This could, for example, involve finding a new partner or member.

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). Your heirs must come to an agreement with the other partner(s). 

Buy-out clause

With a buy-out clause (overnamebeding) you can arrange for partners to take over your property that was used for the business , tools for example, following your death.

4. Take out a term life insurance policy

With a term life insurance policy you arrange that your dependents receive a benefit after you have died. This way you ensure that they do not get into financial problems after your death.

5. Business partner insurance

A business partner insurance policy (compagnonsverzekering) is a life insurance policy for business partners. If you die, the  policy pays out a sum of money to your business partners. This means they can continue running the business. For example, they can buy out your heirs.

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

When a business owner dies, the Business Register is automatically notified via the Personal Records Database. As every situation is personal and complex, your next of kin will receive a letter from an adviser from the KVK Bereavement Support Team (Nabestaandendesk). within 8 weeks of the death. They can then discuss with this adviser what will happen to the business. Advisers will help, for example, with the deregistration of the deceased from the KVK Business Register.