What happens to my business tomorrow if I die tonight?
If you were to die tonight, who would be in control of your business tomorrow?
If you have a will supported by a trust, your estate will be controlled and distributed subject to the terms of the trust as executed by the trustee of the trust. The trustee would be in place fairly quickly but not right away.
If you have a will but do not have a trust, your estate will be subject to probate of your will and your business interest will be controlled by the personal representative (sometimes called executor) of your probate estate. The personal representative is charged with carrying out the terms of the will through the probate process. Generally, it takes thirty to sixty days to initiate probate and have a personal representative in place.
If you do not have a valid will, your interest will be subject to probate as directed by the intestacy statute of the state of your residence. A personal representative (executor) will be appointed by the probate court pursuant to statute. Generally, intestacy statutes divide property among the surviving spouse, children, and blood relatives. Intestacy probate proceedings take longer to initiate than probate where a will is in place.
A good question to ask: If I were to die tonight, what would be the problems for the business the next day? The next week? The next year? Are you the only authorized party to draw on the line of credit? Would required financing still be in place after your death? Are you the only authorized party on certain accounts? Are there records, digital or paper, that only you can access? Is there an emergency plan that would be activated by your absence? Who would take charge? Are you comfortable with who your trustee or personal representative will be? Would your personal representative or trustee know what to do (short term or long term) with respect to your business interest?
For most business owners the concern in the event of death is that the business interest be transferred for a reasonable value with the resultant cash available to the family as soon as possible. Is this plan in place?
When an owner dies, the business will be in crisis. Please click to access a PDF containing a business survival checklist.