Probate is complicated enough in ordinary situations. When the deceased person held an interest in a closely held business, the process could be even more complex and affect the company’s operations. It is wise to work with an experienced business succession attorney who can 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 it, such as executing a buy-sell agreement. It is also necessary to determine whether the value of the deceased person’s business interests was held in a revocable living trust.
A buy-sell agreement is an arrangement made by the owners of a business that specifies what will 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 create a buy-sell agreement 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 facilitate the sale and ensure the business continues to operate until the sale is complete. Probate affects business succession in Wheaton by potentially involving an outside party, the estate representative, in the operation and succession of the business.
In some situations, if an individual is the sole owner of a business or a majority shareholder, that person’s will may specify that a business advisor be appointed to manage the business until the business succession plan transfers control to the successors. If not provided for in a will, a trust may appoint an advisor.
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.
Probate affects business succession in Wheaton much more directly when the executor or personal representative manages some or all of the business operations. The representative is required to manage the estate’s operations in the best interests of the estate and has a duty to do so with prudence.
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 to consult an attorney regarding legal requirements. A professional appraisal may also be recommended. How Wheaton probate affects business succession is determined in large measure by the preparation done in advance. 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.
