The role of the probate court is to ensure the proper administration of a person’s estate. In many cases, this can include the proper distribution of a decedent’s business assets. However, probate also has a reputation of being lengthy and costly, potentially hindering a business’s operations.
With this in mind, proper estate planning can help to minimize the impact of probate on the continued success of your company. A business succession plan can function as a testamentary document that informs the court of your wishes for your company and simplify the probate process. Speak with a knowledgeable attorney to learn more about how probate affects business succession in Raleigh.
The probate process exists to administer to a person’s estate after they die. The probate courts have broad powers to appoint executors, determine the validity of testamentary documents, and apply state laws concerning intestacy.
Once a person dies, interested parties can submit testamentary documents to the court. The court will then determine the validity of these documents and oversee the actions of executors, who must fulfill the provisions established by the decedent. If no such documents exist, the court will follow the intestacy rules according to North Carolina General Statutes § 29-15.
These rules could have a dramatic impact on a person’s heirs as well as their business. If a person’s estate must be split between two or more parties according to the intestacy laws, this could result in the forced sale of a company. A nearby lawyer could help protect business interests from these negative probate outcomes through proper estate planning.
For the purposes of probate, a person’s interest in a company is considered an asset. This means that any testamentary document that an individual creates must address these interests. The most effective way to accomplish this is to create a business succession plan.
As applied to probate, these plans can function similarly to Wills. A business succession plan can mandate the transfer of business assets to a single heir. It may also split a person’s interests and distribute them to multiple people. Finally, a plan may require the sale of the company with the proceeds going to any designated party.
Ultimately, a business succession plan helps parties with company assets to direct the movement of those assets after their death. A properly created and executed plan will have the full force of the law behind it, and probate courts will require executors of the estate to fulfill those directives. These plans also override the state’s intestacy statute. To take full advantage of the powerful benefits of a succession plan, business owners in Raleigh should work with a skilled attorney when drafting their documents.
The probate process can be frustrating and lead to months or years of stress for your heirs. Especially when probate is considering the distribution of business assets, it is essential to create an effective plan that allows a person and their loved ones to retain control.
Having a comprehensive business succession plan could help you to dictate what happens to your company after your death, incapacity, or retirement. This can include the direct transfer to another heir, the sale of the company, or a number of other options. Contact our firm today to discuss how probate affects business succession in Raleigh and plan for your future.