Updated 25 October 2026
Administration of Estates - Potential Problem #49: Estate with Complex Business Holdings
A business owner may describe a warehouse, family company and investment portfolio as “my assets”, even though different entities hold them. After death, the executor must establish what the deceased actually owned, what powers they held and who can now make decisions. A will cannot automatically distribute every asset the deceased controlled.
This article focuses on administering existing business structures after death. The starting point is to separate the estate's property from company assets and property held on trust, then identify the documents governing each interest.
1. Map the entities before valuing the estate
Collect the will, company constitutions, shareholder and unit registers, trust deeds and amendments, financial statements and loan records. Match each property, bank account and business contract to its legal owner. Record whether shares or units registered in the deceased's name were held beneficially or for someone else.
| Structure |
Possible estate interest |
Important distinction |
| Fixed trust |
Transferable units or a surviving beneficial interest |
The deed defines the rights and how they pass on death. |
| Discretionary trust |
Established entitlements or loans owed to the deceased |
Being a potential beneficiary does not confer a fixed share of the fund. |
| Holding company |
Personally owned shares and any debt owed to the deceased |
Subsidiary shares and operating assets remain with their respective owners. |
Record each role separately. A person might have been shareholder, director, appointor and lender, with different succession rules for each. For partnerships and joint ventures, check the agreement's death, continuation and buyout provisions before assuming an interest can simply be transferred.
2. Fixed trusts require examination of the actual entitlement
In a fixed trust, beneficiaries have defined entitlements rather than depending entirely on the trustee choosing who receives a distribution. Those rights may concern income, capital or both. A transferable interest that survives death can form part of the estate, but the executor must identify precisely what the deed confers.
Some unit trusts provide proportionate rights based on units held. Check unit classes, redemption provisions, transfer restrictions and any compulsory buyout on death. Inheriting units does not automatically entitle someone to demand a particular building or business asset from the trustee.
The label “unit trust” is not conclusive. For example, Revenue NSW applies specific requirements when treating a trust as fixed for land tax. The classification for a particular tax purpose should not replace a legal review of the beneficiary's rights.
3. Discretionary trusts separate potential benefits from ownership
In a discretionary trust, the trustee generally selects recipients and amounts within the deed's terms. A person who is merely a discretionary object usually has no fixed share of the trust fund to leave by will. They have rights concerning proper administration, but their children do not automatically inherit a proportion of the underlying assets.
There may nevertheless be valuable estate rights. Investigate distributions already validly made but unpaid, loans owed to the deceased and any vested or default interests. Their existence and treatment depend on the deed, resolutions and records. Revenue NSW distinguishes discretionary objects from beneficiaries with default interests.
Control also needs separate attention. An appointor may have power to replace the trustee, while directors control a corporate trustee's decisions. Read the succession clauses and any valid nominations. Do not assume that an appointor's office passes to the executor, or that inheriting trustee-company shares makes the recipient personally entitled to trust property.
4. Holding companies add another ownership layer
A holding company may own shares in operating subsidiaries, investments or other assets. If the deceased personally owned its shares, those shares may enter the estate. The holding company still owns its investments, and each subsidiary continues to own its own business assets and owe its own debts.
ASIC explains that shareholders do not own a company's assets. An executor cannot treat a subsidiary's bank balance as estate cash or directly give its warehouse to a beneficiary under the deceased's will. Any sale, dividend or other transaction needs the correct authority and legal and tax treatment.
Check whether the company holds assets beneficially or acts as trustee. A corporate trustee and a holding company perform different roles, even if the same family controls both. Prepare separate records for each capacity.
5. A real NSW case showing why control is insufficient
In Public Trustee v Smith [2008] NSWSC 397, Dr Ward's will purported to give away a Randwick property held by the corporate trustee of a family trust. The Court rejected the argument that her control of the trustee and ability to benefit from the trust made her the property's beneficial owner.
The Court also distinguished a debt from ownership: repayment of borrowing had made Dr Ward a creditor of the trustee, rather than the owner of the land. The decision illustrates why executors must examine both trust property and amounts owed to the deceased. Further questions about implementing her wishes through available powers were left open; the case should not be presented as a universal rule that trust arrangements defeat every testamentary intention.
6. Establish authority to keep the businesses operating
The executor's appointment does not automatically make them a company director or replace the trustee. ASIC's guidance on sole directors and sole shareholders explains the special mechanism under section 201F of the Corporations Act: where the deceased was both sole director and sole shareholder of a proprietary company, the executor or administrator can appoint a director.
Other arrangements require their own analysis. Confirm signing authority for payroll, banking and essential contracts, and complete necessary appointments and notifications. Anyone accepting a directorship takes on duties to the company, even if also acting as executor. Keep estate, company and trustee decisions properly documented and address conflicts between those roles.
Business obligations continue while probate is being obtained. Establish who monitors tax lodgments, employee entitlements, insurance renewals and lease or finance deadlines. Preserve business records and lawful access to accounting systems, websites and other digital assets so the owner's death does not interrupt essential administration.
7. Reconcile loans liabilities and business value
Ask the accountant to reconcile amounts owed between the deceased, companies and trusts. Identify who owes each debt, its terms, security and recoverability. An amount described informally as a “director's loan” may be owed to or by the deceased. Check guarantees and contingent liabilities instead of assuming company debts either disappear or automatically become estate debts.
Obtain a valuation of the interest the estate actually holds. Relevant matters may include voting rights, transfer restrictions, debt, sustainable earnings and dependence on the deceased's personal involvement. Avoid double counting subsidiary assets already reflected in a holding-company share valuation. A loan receivable and the company's obligation to repay it must be treated consistently.
8. Compare retention sale and distribution before committing
The executor may need to consider retaining shares temporarily, selling an interest or transferring it to a beneficiary. Check the will's powers, other owners' rights and any agreement requiring an offer to existing shareholders. A beneficiary wanting cash does not automatically authorise a sale of assets owned by another entity.
Model the money available after liabilities, transaction costs and tax. The ATO's deceased-estate guidance explains that tax can arise from income and later asset disposals. Obtain current advice before restructuring: trust variations can also attract NSW duty, and a transfer following death is not a universal exemption for every company or trust transaction.
9. Explain the structure to beneficiaries early
For example, imagine a deceased person personally owned holding-company shares, units in a property trust and shares in a family trust's corporate trustee. Those share and unit interests may form part of the estate, subject to their terms. Inheriting trustee-company shares concerns company ownership and potential control; it does not bring the family trust's investment property into the estate. This is an illustrative example, not a reported case.
Give beneficiaries an explanation of the estate's interests, the decisions required and the expected costs. Seek legal advice where ownership or powers are genuinely disputed before taking irreversible steps. For planning during life, see our business succession article.
CM Lawyers can coordinate estate administration and commercial legal advice with the accountant and business valuer. Contact Christine Manolakos and the team to review the ownership documents, authority and available options before distributing business interests.
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