What Happens to a Family Business When the Owner Dies? Succession & Estate Planning in South Africa

Feb 18
2 min read

If you own a family business, proper estate planning is crucial to protect both your company and your loved ones. Without a clear succession plan, your business may face operational disruptions, disputes, financial losses or even closure. Here’s what every South African business owner needs to know.

Why Business Succession Planning Matters

A family business is more than an asset, it’s livelihoods, legacy, and stability. When an owner passes away:

Bank accounts may be frozen.
No one may have signing authority.
Heirs may disagree on who takes over.
SARS and creditors may make claims.
Employees may face uncertainty.

Key Legal Considerations for Business Owners

1. Drafting a Will That Includes Business Assets

Your will should outline:

Who inherits your shares or membership interest
Whether the business should continue operating
Who has authority to make operational decisions

2. Updating Your Memorandum of Incorporation (MOI) or Partnership Agreement

For companies or partnerships, the governing documents should specify what happens to ownership if a partner dies.

3. Buy-and-Sell Agreements

These agreements ensure:

Remaining partners can buy a deceased partner’s shares
The estate receives fair compensation
The business continues without disruption

4. Key Person Insurance

This helps the business recover financially after losing a critical owner or director.

5. Trust Structures

Placing shares in a trust can:

Protect business continuity
Control how benefits are distributed to children
Prevent inexperienced heirs from taking over prematurely

6. Appointing a Trained Successor

A successor should be identified early, trained gradually, and legally empowered to step in immediately.

Common Problems When No Plan Exists

Frozen business accounts
Feuding heirs
Employees leaving
Loss of clients or contracts
Forced liquidation

How Gascoigne Randon & Associates Can Help

We assist business owners with:

Succession and estate planning
Drafting business‑ready wills
Shareholder agreements
Trust setups
Tax and estate duty implications

Contact Us

Gascoigne Randon & Associates

56 7th Avenue, Edenvale, Gauteng, 1609

011 453 1077 / 011 234 1021

info@gascoigne.co.za