Inheritance is a fundamental aspect of inheritance law, encompassing both private assets and those related to business operations.
Depending on the nature of the inherited assets, the process varies in terms of formal, tax, and organizational aspects.
Inheriting a business or shares in companies differs significantly from inheriting private assets. It may involve not only acquiring assets but also taking on the responsibility of managing the business and meeting specific legal requirements. Business or share inheritance requires complex procedures. Proper succession planning streamlines the transition of shares in the event of a partner’s death or ensures the continuity of business operations. Ensuring the uninterrupted functioning of the business during this process is particularly important.
Sole Proprietorship
For sole proprietorships, ensuring business continuity after the owner’s death is crucial. The Succession Management Act allows for the appointment of a temporary manager to run the business until the formal division of the estate. Without a succession manager, the business ceases to exist upon the owner’s death, potentially leading to the loss of clients, contracts, and business value. Succession planning for sole proprietorships helps prevent business liquidation and ensures a smooth transition in the event of the owner’s passing.
To avoid succession-related issues, a business owner can appoint a succession manager during their lifetime. This can be done through the Central Registration and Information on Business (CEIDG) or in writing, with the designated person’s consent. If the entrepreneur does not appoint a succession manager, one can be designated by the spouse, statutory heirs, or testamentary beneficiaries. They must obtain the majority consent of the heirs and register the manager with CEIDG within two months of the owner’s death.
The succession manager temporarily oversees the business after the owner’s death until the estate matters are settled. Their main responsibilities include:
- Managing the business,
- Executing contracts signed before the owner’s death,
- Paying tax obligations and social security contributions,
- Using the company’s bank account.
The succession manager remains in charge until the completion of probate proceedings, but for no longer than two years (extendable by the court to five years).
After probate proceedings, the business may be:
- Taken over by one or more heirs,
- Sold or transformed into a company.
Heirs can continue the business after transferring necessary permits, licenses, and authorizations if required.
Inheritance of Shares in Commercial Companies
When inheriting shares in commercial companies, such as limited liability companies (sp. z o.o.) or joint-stock companies (S.A.), the company’s articles of association or bylaws play a crucial role. Some company agreements include clauses preventing the inheritance of shares, meaning that heirs may only receive a monetary equivalent (the calculation method should be specified in the company agreement) in exchange for transferring the shares to the remaining partners. In other cases, heirs may inherit shares but must meet specific requirements, such as obtaining the consent of other partners or fulfilling conditions outlined in the company agreement.
For more information on inheriting shares in a limited liability company, read our article: Succession of Shares in a Limited Liability Company
Shares or company stock can also be transferred during the owner’s lifetime through a donation, helping to avoid many legal and tax complications.
Proper succession planning facilitates the transition of shares in the event of a partner’s death. Business owners should safeguard their companies against unforeseen circumstances to ensure continued operations and prevent difficulties for their heirs. Succession planning helps avoid disputes, reduce tax burdens, and maintain business continuity. SKLAW provides a comprehensive and individualized approach to business owners’ needs, offering complete support in developing an effective succession strategy.
This article is for informational purposes only and should not be considered legal advice or a legal opinion. For legal consultation, please contact our law firm.