Hello 

Our doctor died, and his practice was lost.  There was a doctor who wanted to step in and pick up the practice, but he couldn’t because the practice had gone into probate and the courts had to approve anything that happened in the practice.  In the year it took to work through the legal issues, the practice was  basically worthless.  The clients had disappeared, the drugs were out of date, and the practice was just “gone.”  The doctor’s spouse got almost nothing when the practice was finally cleared for sale by the lawyers and court. 

The statistics for the survival of a small business after the death of the owner are nearly zero.  If you want a business to survive the death of the founder/owner, you need to make sure the business doesn’t drown in the legal swamp after the death.

You could have extensive provisions put into the corporate bylaws or the LLC operating agreement.  It is possible for a company to dictate what happens after the death of the major shareholder/member.  But I have only seen it done once or twice in 40 years of reading company documents.

It’s a disaster if the company ends up in probate.  The easiest way to avoid probating a company is to recognize that it is an “asset” that needs to be protected from probate, just like a bank account.  The estate planning attorney and certainly the internet sites never make the connection between estate planning and business planning.

A living revocable trust is the easiest way to guarantee a smooth ownership transition after the death of a small company’s owner.  The question is how to get the company ownership into the living revocable trust.  My new YouTube video goes through the process of getting a company into a living revocable trust.  Check it out now.