Death Of A Business Owner
What happens when someone passes away and they own a business? Can the executor or the administrator carry on the business?
Typically, what we look for is “what is the legal entity?” Is this a sole proprietorship? LLC? A limited liability company, a limited partnership? Or corporation? Is there more than one member in the limited liability company that could carry on the business? Or is this truly a sole proprietorship?
Ohio Code Revised:
Under the Ohio revised code, the way it works is if it is truly a sole proprietorship, which means there's only one person who owns the business, then an administrator or an executor can carry on the business for four months without the Probate Court's permission.
Beyond those four months, they have to seek permission or leave from the Probate Court to carry on the business. However, if it is a limited liability company that has multiple members or it is a corporation that has multiple members, then the administrator or the executor cannot carry on the business.
Again, the administrator or executor cannot carry on the business, but rather it is the business of the other members or shareholders to carry on the business.
A doctor gave his wife his shares in the company. He passed away but was a part of a medical association. The issue in question was “is the wife able to carry on the business?”
The wife did not have a medical license, however, she retained all of his voting rights as a voting member of the company which means she owns the shares of the company and can vote.
Now the nuance to all of that is today, she can't vote because the shares are still in her deceased husband's name. The shares belong to the estate, not to the person. So once the probate court transfers those shares to the wife, then she'll be able to exercise all of her voting rights. In the meantime, if there are any dividends or anything that he's legally entitled to, his estate will receive it. She would not receive it but the estate would receive it.
Our goal at Littlejohn Law is to help executors, administrators, trustees, and power of attorneys, understand the basics of what they have to do and don’t have to do. And what their legal responsibilities and obligations are. Give us a call to discuss this in more detail 740-346-2899.
Littlejohn Law, LLC
The Real Estate and Probate Law Firm
352 Main Street
Wintersville, OH 43953
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