Probate is complicated enough in ordinary situations. When the deceased person held an interest in a closely-owned business, the process could be even more complex and affect the operation of the company. It is wise to work with an experienced business succession lawyer who could help resolve potential conflicts or problems and prevent delays.
When considering how Wheaton probate affects business succession it is necessary to review the steps taken to prepare for business succession such as the execution of a buy-sell agreement. It is also necessary to determine whether the value of the deceased person’s business interests was held as part of a revocable living trust.
A buy-sell agreement is an arrangement made by owners of a business specifying what is to happen if one of them dies, retires, or otherwise steps away from the business. Companies may incorporate a buy-sell agreement into their operating agreements or bylaws, or a buy-sell agreement may be created as a freestanding document.
Most buy-sell agreements specify that if one of the owners or partners dies, the others either have the option to buy out that partner’s interest or are required to buy the deceased partner’s interest. Sometimes, the agreement provides for the business itself to buy the interest, and life insurance policies may have been purchased to cover the expense.
If a company has a buy-sell agreement, the personal representative of an estate in probate may need to work to facilitate the sale and ensure that business continues to function until the sale is complete. Wheaton probate affects business succession by potentially involving an outside party, the estate representative, in the operation and succession of the business.
In some situations, if an individual was the only owner of a business or a majority shareholder, that person’s will may specify that a business advisor is to be appointed to manage the business until the business succession plan transfers control to the successors. If not provided for in a will, an advisor may be appointed by a trust.
Wheaton probate affects business succession as the trustee or personal representative works in tandem with the business advisor. Generally, the business advisor would manage the business while it is part of the estate in probate while the trustee or representative oversees the transfer of the business interest out of the estate.
When there is no provision for a business advisor and no buy-sell agreement, then the estate administrator or executor may be responsible for managing the deceased person’s business interests until those interests devolve to beneficiaries or heirs. Court authority may be required for the estate representative to operate a business for more than one month.
Wheaton probate affects business succession much more directly when the executor or personal representative is managing some or all business operations. The representative is required to manage operations in the best interests of the estate and has a duty to manage with prudence.
Wheaton probate could have a profound effect on a business during the transition to new leadership. A representative may even determine it is in the best interests of the estate to liquidate a business.
The executor or representative is advised to have an audit conducted by an outside accountant and consult an attorney with regard to legal requirements. A professional appraisal may also be recommended. How Wheaton probate affects business succession is determined in large measure by the preparation done ahead of time. If a buy-sell or other agreement is ready to spring into action, probate may have only a temporary and minimal impact on succession. If there are few plans in place for business succession, probate may have a profound effect.