I spoke to two different business owners recently about what would happen regarding the sale or disposition of their 100% owned business when they died.
The first thing we noted to each of these individuals was that their businesses were community property that they owned with their wives. Even though the business is titled in the husband's name, and the husband was the only spouse who built the business, as long as the business was formed during the marriage, it is community property and owned by each spouse.
It appears that both business owners will keep things simple with their estate plans. They will appoint either their spouse or some other third party as the independent executor of their estate. When they die, the surviving wife (as owner of one-half of the business) and the independent executor (as owner of the other one-half of the business) can transact whatever terms they feel necessary regarding the disposition of the business.
One business owner considered having key employees purchase life insurance on the business owner's life so that when the business owner died, the executor and surviving spouse would sell the business to the key employees. The key employees would use the life insurance proceeds to pay the estate and the surviving spouse for ownership of the business. This arrangement would need to be set up in advance.
If you live in Louisiana and want to find out more about how your business should be handled after your death, simply send me an email at paul@rabalaislaw.com (put "Need Business Succession Help" in subject line) or give our law firm a call at 225-329-2450.
Until next time...
Paul Rabalais
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