What Happens to Business Assets when a Business Owner Dies?

A family member who passes away leaving a business, or interest in a business, creates special challenges for estate administration. The person appointed to serve as the estate representative may find themselves in a complex business succession situation during the estate administration process.

 

The estate representative is often a spouse or other loved one who may not have expertise in business succession. The representative will be faced with the job of securing the deceased’s interest in the business on behalf of the estate. This task can be complex and risky depending on the type of business and whether succession planning was in place.

 

There are different processes to settling these situations depending on the type of business and whether business succession planning was in place. The easiest path for the representative is when succession planning was in place before passing. A “buy-sell” agreement and properly drafting operating agreement can go a long way to resolving the business-estate issues.

 

If no succession planning was in place, then the estate must conduct a business valuation and negotiate with the surviving co-owners. The main issues which must be addressed are transferring the deceased’s share of control and conducting a buy-out of the deceased’s share of the assets.

 

The personal representative is responsible to the beneficiaries of the estate for protecting all estate assets, including the business interest. If the representative does not protect the estate’s interest, or undervalues the interest, the representative may be at risk of claims by disappointed beneficiaries. Business succession situations can complicate the estate administration process and result in long delays unless the issues are anticipated at the start.

 

Our law office helps negotiate and close business-estate situations. We know the importance of keeping personal representatives out of trouble and closing the estate properly for all beneficiaries.

 

As a probate law firm for estate executors, we help settle estates efficiently and reduce stress. If you know someone faced with a probate process or roadblocks to an estate property sale, please have them contact us for a free evaluation at:

 

Phone: (215) 918-4242 

Send Us an Email

 

If you are not quite ready for a consultation, download our probate handbook HERE. We’ll send you helpful probate guides and resources so you know how to handle the estate.