Can a company be a beneficiary of a Will?

The short answer

Yes. A company can be a beneficiary of a will, just like a person, a charity or any other organisation. It can receive a specific gift, a sum of money, or a share of the estate. The main requirements are identifying the company correctly and wording the gift clearly.

How a gift to a company works

A company is a legal person in its own right, separate from the people who own or run it. When you leave a gift to a company, the company itself receives it — not the shareholders, the directors or the person you deal with. The company’s directors then deal with the gift in the same way they deal with any company property, in accordance with the company’s constitution and the law.

Getting the name right

Identifying the company correctly is the most important part of a gift. Use the company’s full legal name exactly as it appears on the New Zealand Companies Register, and consider including its company number. Avoid using only a trading name — a gift to “the shop on the corner” or a brand name can be unclear and may not take effect as intended.

What kinds of gifts work well

• a specific sum of money — straightforward and common;
• a particular asset, such as property or equipment the company uses;
• a share of the residue of the estate; or
• shares in the company itself, which can be more complicated and needs care.

Gifts of shares in a private company can raise issues of control, valuation and what the other shareholders want. If the company’s constitution or a shareholders’ agreement contains pre-emptive rights or restrictions on who can hold shares, a gift of shares may not be as simple as it sounds.

What to be careful about

Before leaving a gift to a company, think about:

• whether the company still exists — a company that has been struck off the register no longer exists, and a gift to it may fail;
• who will control the gift after you die — a gift to a company you own may ultimately benefit its shareholders, which might not be what you intend;
• whether the company’s shareholders, constitution or agreements affect what can be gifted or how it must be dealt with;
• tax — gifts to companies can have different tax consequences from gifts to individuals or charities;
• whether the company is part of a larger business or trust structure that needs tailored advice; and
• whether a different recipient — such as a person, a trust or a registered charity — would achieve your intention more clearly.

Companies, charities and other organisations

Charities and other organisations can also be beneficiaries, and the same principle applies: use the correct full legal name. A registered charity has its own legal identity, which may or may not be a company. If in doubt, check the register and use the official name.

When to get advice

Get legal advice before signing if any of the following apply:

• the company is yours, or you are a director or shareholder;
• the gift is substantial;
• you are gifting shares in a private company;
• the company is part of a business or trust structure;
• the company’s existence or identity is uncertain; or
• you are unsure whether the gift will achieve what you intend.

The bottom line

A company can absolutely be a beneficiary of a will — the key is naming it correctly, making the gift clear, and understanding what will happen to the gift once the company receives it. That last point matters most when you are connected to the company yourself. Our guide on beneficiaries covers the basics of who can receive a gift in a will.