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How to tie up a business following the owner’s death

On Behalf of | Jan 18, 2023 | Estate Planning |

When a Louisiana small business owner dies, the estate’s executor or administrator might have to deal with the business in addition to the deceased person’s other assets and liabilities. While corporations can continue to exist after a shareholder dies, sole proprietorships do not have a legal entity structure and fall under the assets that executors or administrators must handle. If you’re in a similar situation, read on for some guidance.

Open the estate and create an inventory

If the deceased person left a will in which you were appointed to serve as the executor, you will be responsible for opening the estate. File the will with the probate court to open the estate and obtain letters of testamentary that you can use to open a bank account in the name of the estate. You will then need to inventory all of the deceased person’s assets, including those of the business. Review the decedent’s books to identify any client who owes the business money and then collect on those. You should also look for anyone who has paid money but has not received services. These people should receive refunds. Once you create an inventory, you will need to file it with the court.

Take care of debts and tax liabilities

You will need to publish a notice in the local paper for creditors to file claims with the state by a certain date. Verify any filed claims and pay them out of the estate proceeds. Once all of the debts have been paid, you will need to file an estate tax return before distributing the remaining proceeds to the named beneficiaries. If the decedent included successions plans for the business in the will, follow them.

If there was no will, the court will appoint an administrator to handle the estate. The appointed administrator’s duties will be the same as those of an executor. However, any assets remaining after the liabilities have been paid will need to be distributed according to Louisiana’s intestacy laws. The administrator can sell assets to pay liabilities as needed and distribute the remaining money and property to the decedent’s heirs.