We don’t just become entrepreneurs for ourselves. Many of us do it because we want to build a legacy; something that will benefit not just us, but our families for generations to come.
So then, it leads to the question: What happens to your business when you die? The answer depends primarily on two things:
- How the business is structured, and
- What (if any) planning you’ve done.
Sole Proprietorships: There is no legal distinction or separation between you and the business; the business will die when you die. The business assets are typically liquidated and the proceeds would go into your estate and be distributed to your heirs.
LLCs/Corporations: Unlike sole proprietorships, LLCs and corporations do not die when you die. In many situations, your business interests will go into your estate and distributed to your heirs. Your heirs can then decide to continue operating the business, sell their interests to a third party, or shut it down and liquidate.
What happens to your business after you die is whatever you direct. In other words, if you’ve done any estate planning or business succession planning, your will/trust/other planning documents will control what happens to your business when you die. If you have not done any planning, then your state’s intestacy laws (ie. the laws that describe what happens to your estate if you do not have a will) will control what happens to your business when you die.
Check out this episode of All Up In Yo’ Business to learn more about planning for your business’s future. And be sure to subscribe to our YouTube channel for more All Up In Yo’ Business!
Want more information for your business? Check out: Essential Tools For Your Online Business.