What happens when a business partner dies in Florida?
At MLG Business Litigation, our Florida attorneys know that starting and building a business is a life-long dream for many. Often, business owners place all their focus on success but rarely plan for an emergency. Especially one that involves death.
Unfortunately, tragedies can occur.
When the owner of a Florida business passes away, several things can happen.
A succession plan is put in motion, the partnership agreement dictates the next steps, our Florida laws take the lead in the direction of the company, or confusion ensues.
When a Florida business owner passes away, the fate of the business depends on its structure.
Here is why.
Why a Florida Business Structure Holds the Keys to Its Succession
Our Florida business litigation attorneys explain to new business owners that choosing the right business structure from the beginning of its organization is a key step in ensuring the business continues the way the partners imagined after one is no longer around.
From the beginning, an experienced Florida business attorney can determine which structure is best, based on the partners’ circumstances and business goals.
Sole proprietorships, corporations, and LLCs all have different trajectories when a partner passes away.
Sole Proprietorships & Succession Plans
Sole proprietorships are businesses where the owner and the business are legally the same.
That means, if the owner passes away, the business also ceases to exist.
The business assets will be liquidated by the estate to pay off any debts and the balance will be distributed to the estate’s beneficiaries.
Corporations & Succession Plans
Unlike, sole proprietorships, corporations do not cease to exist when an owner passes away.
When a Florida corporation owner passes away, the estate automatically becomes the owner of the deceased’s shares.
The same is true when a single shareholder or majority shareholder of a corporation passes away.
His or her estate becomes the new owner of the company until the estate is closed and the shares are distributed according to either the decedent’s will or Florida’s intestacy laws.
LLCs & Succession Plans
Florida LLCs operate under the terms of an operating agreement, making them much different from other business formations.
The operating agreement usually specifies what will happen in the event one of its members passes away.
The agreement will dictate whether the business should continue and if surviving members may allow new members in.
If the agreement does not outline a succession plan, Florida law will determine the next steps, which could result in the dissolution of the business and the distribution of the assets.
Partnership agreements can provide alternatives to the closure, including sales, acquisitions, or details that allow the business to continue operating.
If you are a business owner who is navigating the details of a partner or shareholder’s death and are unsure of the legal requirements, we can help outline the details of your unique circumstances during a free case assessment.
Contact Morgan Law Group in Florida for a Free Case Assessment Today
Protect your legal rights and learn more about your business ownership or partnership options by contacting our Morgan Law Group attorneys in Florida today at 888-904-2524 for a free case evaluation.