Late DH’s company shares and debt

[Isawthesigns]

My DH passed away over a year ago and we are still sorting out his estate. He and his BIL ran a company together with 50% shares each (1 share each). They also took out a loan together which they both personally guaranteed.

The plan is for there to be a swap - I give the share and the loan liability is passed to BIL’s wife BUT the loan company won’t do this until BIL has majority shares and they have done checks on BIL’s wife and the company. So that puts me at risk of having transferred the share and still being liable for the loan.

Does anyone know how to do this without putting myself at risk? BIL’s solicitor has not come up with any solutions.

I don’t know the answer (perhaps a legally binding agreement to transfer the share back if the loan to the wife doesn’t proceed) but I’d say you need to speak to your own solicitor - BIL’s solicitor will be acting in his interests, not yours, so even if they proposed a solution it may not fully protect you.

You need a lawyer to have your back and help settling the form of docs but what it sounds like you need is for the following to happen simultaneously:

1. share transfer
2. release of your DH’s guarantee
3. BIL’s wife to enter into new guarantee to lender.

My suggestion would be a share purchase agreement (i.e. a contract between your DH’s executors) recording all of the above happening - I would suggest that items 2 and 3 should be conditions to completion of 1 and should also be recorded as completion deliverables so that completion only takes place once all of those ducks are in a row.

The lender would need to have sign-off on the docs but the structure I’ve suggested is pretty standard so if they’re a sophisticated lender I’d expect them to be totally fine with it.

Sorry, just to clarify, the share purchase agreement (aka SPA) would be between the executors/trustees of DH’s estate and BIL’s wife.