Got Biz Legal Questions?

You know what today is!? It’s Friday!! Another Got Biz Legal Questions?

This is a great question!

Yes! You can pass your business to your children in your will. However, there are some considerations. First, if you only have one child and that child predeceases you before you update your will, your business is passed to your estate and the courts will decide. If you have more than one child, the issue becomes who will run it and will the other children have a stake in the company, whether it is managerial or financial.

Now, here’s an issue that could come up and complicate things: someone could contest your will, and if they succeed, your will is no longer valid. That means your will is thrown out and your business goes to the estate and the judge decides. When I say the judge decides, I really mean the state law governs. I will not delve deep into estate and probate law right now. But for purposes of answering your question, some states require automatic dissolution of the company. Kiss your dreams of passing that business along to your children goodbye.

BUT, if you write your desires in your operating agreement for LLC’s, most likely, the operating agreement will trump the state law and bypass any contested will issues.

Short answer: Yes, you can. There are serious legal issues to work through and personal ones (impact on personal relationships by the choice you make) that you want to sit down with an attorney to resolve. The alternative is write it into your operating agreement (shareholder agreement for corporations).

I hope that helps and gives you more to think about.

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