Death does not stop a corporation or LLC

  • Posted by Bruce McDonald
  • January 16, 2015
  • (0) Comments

Besides taxes and liabilities, there is another good reason to incorporate a sole proprietorship: what happens when you die.

There are often several good reasons to incorporate a business that is a "sole proprietorship" (one man or woman doing business or offering professional services).  In addition to shielding against some liabilities and saving taxes in a few cases, there are lots of good reasons when one considers the possible death of that person.  Even a sole shareholder corporation or limited liability company (LLC) can set up the paperwork to have officers or directors named, to step forward and legally manage the business even after the "heart of the business" dies.

The Florida Statutes give a personal representative only four months to "wind down" the business of the decedent, unless the court approves an extension.  The probate judge will usually be heavily involved in such a "winding down," which means more legal fees and in some counties serious and damaging delays.  If the business had been incorporated, there may be no court involvement at all. Even in the case of a professional such as a doctor or lawyer, the shares of whose "corporations" can only be owned by another licensed professional, the officers and directors can take a reasonable amount of time to try to sell the assets and "book of business."

Any time the survivors can do that without the costs and delays, and possible adverse rulings, of a probate judge, they are sure to be better for it.