Wills Week Checklist: What Every Business Owner Should Have in Their Will

Your Will Was Probably Written Before Your Business Was

National Wills Week runs every year in the third week of September, and it exists for a simple reason: most people either don’t have a will, or haven’t looked at the one they do have in years. For business owners, that second problem is often the more expensive one.

A will drafted early in your career, or one built from a generic template, tends to focus on personal assets: a home, a car, savings. For a will to be valid in the first place, it needs to meet the formal requirements set out in the Wills Act 7 of 1953, but meeting those requirements is only the starting point. If you’ve since built up shares in a private company, that will may say almost nothing about what should happen to them. And even where it does mention the shares, there’s a real risk it says something that directly conflicts with your shareholders agreement, your buy-and-sell arrangement, or the transfer restrictions written into your company’s Memorandum of Incorporation. That contradiction doesn’t get noticed while you’re alive. It surfaces after you’re gone, at exactly the point when your family and your co-shareholders can least afford a dispute.

This is where will and estate planning services for business owners look different from a standard will drafted for an individual. Getting the two documents to agree with each other is the whole point.

What Your Will Should Actually Say About Your Shares

A will that properly accounts for a business interest needs to go further than simply listing “my shares in [Company] (Pty) Ltd” as an asset. It should work through a few specific questions.

Who is actually entitled to receive the shares? If you want them to go to a spouse, children, or a business partner, the will needs to say so clearly, and that instruction needs to be checked against whatever your shareholders agreement already says about who is permitted to hold shares in the company.

How will the shares be valued? Company shares aren’t like cash. Without a clear valuation mechanism, whether that’s a formula in the shareholders agreement or an independent valuation process, your executor and your heirs are left guessing, which is a common source of delay and dispute.

Does the will match the shareholders agreement? This is the point that trips up more business owners than any other. If your shareholders agreement requires shares to be offered to the remaining shareholders first, but your will bequeaths those same shares directly to a family member, you’ve created a direct contradiction. One document will have to give way to the other, usually through negotiation, sometimes through litigation.

Share Transfer Restrictions Aren’t Optional Extras

Most private companies restrict how and to whom shares can be transferred, whether through the Memorandum of Incorporation, a shareholders agreement, or both. These restrictions, permitted under the Companies Act 71 of 2008, exist to stop shares ending up with someone the other shareholders never agreed to work with, and they remain fully enforceable after your death.

If your will doesn’t account for these restrictions, your executor can be placed in an impossible position: legally bound to distribute the shares according to the will, but practically unable to do so because the company’s own governing documents say otherwise. Reviewing your will alongside your MOI and shareholders agreement, rather than as three separate exercises, is what closes that gap.

Buy-and-Sell Provisions: Making Sure the Money Is There

Many South African businesses with more than one shareholder use a buy-and-sell agreement, usually backed by a life insurance policy on each shareholder, to fund the purchase of a deceased shareholder’s shares by the survivors. It’s a sound structure, but it only works if every related document tells the same story.

Your will shouldn’t attempt to bequeath shares that are already committed to a buy-and-sell arrangement to someone else entirely. Doing so doesn’t cancel the buy-and-sell agreement; it just guarantees a dispute between your heirs, who believe they’re entitled to the shares, and your co-shareholders, who are relying on a binding agreement to buy them. Checking that your will, your buy-and-sell agreement, and your shareholders agreement are pointing in the same direction is one of the most valuable things a business owner can do during Wills Week.

Executor Nomination Matters More Than You Might Think

Who you appoint as executor has a direct effect on how smoothly your estate, and your business interest within it, gets handled. An executor’s powers and duties are governed by the Administration of Estates Act 66 of 1965, but the Act doesn’t require an executor to have any particular familiarity with your company’s affairs, and an executor unfamiliar with your company’s structure, your shareholders agreement, or the buy-and-sell arrangement may take considerably longer to work through the estate, simply because they’re starting from zero.

Naming an executor who understands, or who has direct access to someone who understands, your corporate documentation isn’t a small detail. It’s often the difference between an estate that administers cleanly within months and one that drags on for years while shares sit unresolved and the business itself loses momentum.

A Business Succession Clause Ties It All Together

Beyond who inherits the shares, it’s worth thinking about what happens to the business itself in the period immediately after your death. Who steps into a decision-making role while the estate is being administered? Who has signing authority in the interim? A well-drafted will can include succession provisions that address this directly, working alongside your shareholders agreement rather than leaving the business to operate in a vacuum until the estate is finalised.

Gereelde Vrae

Does National Wills Week only cover simple, personal wills?

The free service offered during National Wills Week is generally limited to basic wills and doesn’t extend to more complex estate planning involving business interests. Business owners are better served using the week as a prompt to have their existing will properly reviewed against their corporate documentation.

What happens if my will and my shareholders agreement contradict each other?

Generally, the restrictions in a company’s Memorandum of Incorporation and shareholders agreement remain enforceable regardless of what the will says, which can leave an executor unable to carry out the will’s instructions as written. This is exactly the kind of conflict a proper review is designed to catch before it becomes a dispute.

Do I need a separate will for my business shares?

Not necessarily a separate will, but the clauses dealing with your shares need to be drafted with your shareholders agreement and buy-and-sell arrangement open on the desk, not treated as a standard personal asset.

How often should I review my will as a business owner?

Any time your shareholding changes, your shareholders agreement is amended, or a buy-and-sell arrangement is put in place or altered. An annual check, timed around National Wills Week, is a practical habit even when nothing has obviously changed.

Make This the Year Your Will Catches Up With Your Business

If your will was drafted before your current shareholding existed, or before your shareholders agreement was signed, there’s a reasonable chance the two documents don’t agree with each other. National Wills Week is as good a prompt as any to find out, while you’re still the one who gets to decide the answer.

OAK Law drafts and reviews wills that are built around business interests from the outset, checked against your shareholders agreement, share transfer restrictions, and buy-and-sell arrangements, so your estate administers the way you actually intended.

Contact OAK Law’s wills and estate planning team to have your will reviewed ahead of National Wills Week.