Inheritance question, wrt business bank guarantees

abstrac9357

Lets consider the hypothetical situation where someone, lets call him Fred, has a (divorced) father (lets call him Bob), who dies, intestate.

Fred, as the child, is the beneficiary of Bob's estate.
Fred will eventually go through the necessary legal process to become the administrator of Bob's estate.

Lets say Bob was a director of a business, and had a modest amount of personal assets.
And that the business has several directors, and a bank account, with an overdraft, on which Bob, and some of the other directors were guarantaur.

The business Bob was in continues to trade, but things don't look good for it over the medium term.


In this hypothetical situation, what would the interaction be between Bob's bank guarantee and Bob's estate?
Could the other directors, after bob's death, continue to run the company, such that Bob's estate would be liable for the debts of the company?
Would Bob's estate somehow only be liable for the overdraft up to Bob's death?

Or could the bank also recover money had had been borrowed (via overdraft) after Bob had died? In other words, does the guarantee survive the death, and in what form?

Fred wants to avoid the situation where his modest inheritance is sucked up by extra debts the business incurs after Bob dies.

Is there anything Fred can do to remove Bob's guarantee to the bank, now that bob is dead, or somehow limit the continuing exposure of Bob's estate to the guarantee?

(In our hypothetical example, Fred is not yet administrator on the estate - if he was administrator, would there be anything he could do?)


I'd be very grateful for any thoughts on how things would work in such a situation, or if there's a common solution to what must be a reasonably common problem.

Thanks.

Wantobe

Would depend on:

1. Wording of guarantee.

2. If the business is a partnership the wording of partnership agreement or if none.

3. If a company, shareholders agreement, assuming deceased was a shareholder.

4. Value of business at date of death versus overdraft.

Depending on what legal protections the deceased had in place ( as per shareholders agreement, wording of guarantee, partnership agreement) presumably you'd be seeking to have deceaseds share of business bought out by remaining directors ( shares bought) and offset against the overdraft ( or his share thereof). Too little detail for reality?