For the purposes of probate, your stake in a business is considered an asset. This is true regardless of whether you are a sole proprietor or a shareholder in a major corporation. As a result, these assets are subject to distribution in the probate process. Accordingly, it is important to take these assets into account when creating your estate plan.
One major function of a business succession plan is to establish your wishes for the company after you pass away and avoid the state’s intestacy laws. An attorney at our firm could help you to understand how probate affects business succession in Wake Forest. Our seasoned lawyers could also assist with identifying your goals for the future of your company and creating documents that give these goals a legal effect.
One of the functions of a business succession plan is to avoid probate entanglements. A proper business succession plan will contain provisions concerning what is to be done with an individual’s business interests after they die. Because probate only occurs after a person dies, this portion of the business succession plan does not have an effect during the person’s lifetime.
It can be helpful to imagine a business succession plan as a sort of Will for a person’s business interests. If a probate court receives a valid business plan after a person’s death, it will order the executor of a decedent’s estate to carry out the terms of the plan. Certain aspects of business succession plans can also have an effect prior to a person’s death, but provisions concerning the owner’s end-of-life wishes would have a direct impact on the probate process.
The probate process has a reputation as being lengthy and costly. However, this is typically only true when a person dies without a Will or other testamentary document. This is called dying intestate.
Having a business succession plan prevents a person’s business interests from being subject to the probate process and the state’s intestacy laws. However, what happens if a person’s business assets are not addressed in their business succession plan or Will?
In these situations, a court will consider a decedent’s business interests as part of their estate and distribute them according to the intestate laws under North Carolina General Statutes § 29-15. These laws outline a strict hierarchy of heirs for how a person’s assets will be divided and distributed. When assets include stakes in a business, this could cause problems for the company’s continued operations.
Having a valid business succession plan is a way of maintaining control during the future probate process. A lawyer in Wake Forest could further explain the importance of a business succession plan in preparing for probate.
The probate courts have immense power to distribute your assets after you die. If you pass away without a Will or other testamentary document, state law mandates exactly how your estate will be distributed, including your business assets. However, there is a way to retain control over the future of your company after your death.
Creating a business succession plan gives strict instructions to courts and executors concerning what you want to happen to your company. This ensures that your wishes will be respected and that your business can continue in the manner you see fit. Contact an attorney today to discuss how probate affects business succession in Wake Forest and learn your options for protecting the future of your company.