Probate is the proving and authenticating of a decedent’s last will and testament. Commonly, the term probate refers to the court administration process that is, in some cases, required to administer assets after an individual dies.
It can be helpful to speak with a probate attorney quickly after somebody dies. When a business owner dies, it may be helpful to seek the assistance of a Virginia probate attorney as soon as possible in order to ensure that the decedent’s business continues to run be maintained as an asset of the estate.
Business Succession Planning
Business succession planning is the process by which a business in Virginia can ensure there is an established plan in case of the death of the business owner or principal. That is, that there is a plan in place that would allow the business to continue to run, even if a principal were to be disabled or pass away. In conjunction with businesses succession planning, exit planning may take place in order to help an individual plan for the preservation of a business asset for his or her on an estate.
In this way, there are two ways in which succession planning takes place in relation to a business owner. First, the business owner is considered individually, as plans are made for the preservation of the asset of the business following the owner’s or principal’s death. Second, the business is considered as an entity, as plans are made for the continual operation of the business following the owner’s or principal’s death.
Business Succession in a Will
An individual’s last will and testament or trust must be coordinated with whatever business documents are in place such that the family of the business owner understands how the business as an asset will pass on to them, or what they can anticipate with regard to the business asset if the business owner were to pass away.
Additionally, it can be helpful for the Virginian business itself to continue on after the loss of the principal or the business owner. In that regard, it is important to review the business’s documents and ensure that they are in line with the individual’s personal estate plan.
For example, if an individual owns a business with a business partner and there are governing documents that discuss what happens upon the death of a partner, then it may be possible that the partner has the option or right of first refusal to purchase the business outright, rather than having the business devolve to, say, the deceased business owner’s spouse, who may not have the same level of expertise or business acumen to keep the business running. In such complicated business scenarios, business succession planning is really intended to, on the one hand, protect the family of the business owner, but, on the other hand, to address any issues that may arise with the continuation of the business upon an owner or principal’s death.
Business Succession Planning & Probate
The concern with business succession as it pertains to probate involves the delay that probate can sometimes cause in regard to keeping a business operational. For example, if an individual passes away as the sole owner of a business, there may not be anyone authorized to continue the operation of the business until a personal representative is appointed to handle the affairs of the business owner.
Thus, when dealing with a business owner or someone who has a business interest at his or her death, it is always a delicate balance between reviewing how the business remains operational such that it remains and is maintained as an asset of the estate, and looking at how the business will be passed on or preserved to provide for the business owner’s family.
Generally, in most cases, a business is an asset. Like many other assets, it may, therefore, be subject to probate, and, in turn, a delay in probate may interfere with the operation of the business.
Simplifying the Process
A business owner may wish to speak with an estate and trust attorney to help address both issues of personal planning for how the business can provide for his or her family as well as issues of business planning for how the business can continue on after he or she passes away.