Under Georgia law, when a business owner dies, his or her ownership interests transfers to his or her estate, unless you have planned differently through your corporate documents. Having a plan in place in your corporate documents, makes it easier for your business to continuously operate without the interruption of going through the probate process. It also allows for you to plan for your incapacity. If you are unable to operate your business because of your mental capacity, your corporate documents can nominate someone to handle business affairs during that time. If you do not, then your family will have to go through the courts to receive the authority to operate the business on your behalf. This process can be difficult and time consuming. If you have a business with a partner, and your partner passes, then his or her share would be distributed to his or her estate and not to you. Therefore, you may operate a business with your partner’s family in the future, which may not be ideal. There are many options for planning for your business after your incapacity or death. You can nominate someone to operate the business during your incapacity, you can transfer your shares to a specific person or trust upon your death, you can direct your personal representative to close the business, or the company can get life insurance policies on the different owners and list the family of the decedent as the beneficiary and have his or her ownership interest in the company revert back to the company. The only way for those plans to be carried out is to make those plans in your corporate documents. We frequently assist clients with this matter and give them peace of mind, knowing that their business has a plan.
What Happens to Your Business When You Die?
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