What Happens to a Florida Business After the Owner Dies?

A person’s estate often includes more than personal assets such as their home or car. It may also include their ownership interest in a business. So what happens to that business? The answer to that question will largely depend on how the business itself was legally structured and what plans the deceased made in advance for that business to carry on after they are gone.

Sole Proprietorship

The simplest form of business you can start in Florida is a sole proprietorship. This is basically a catch-all term used to describe any unincorporated business conducted by a single person. A sole proprietorship has no legal existence separate from its owner. So when the proprietor dies, the business effectively dies with them. Any business assets must then be liquidated as part of the proprietor’s probate estate.

Partnerships

A general partnership is basically what happens when two or more people form an unincorporated business together. Like a sole proprietorship, a general partnership has no legal existence separate from the individual partners. In other words, the partners are personally liable for any debts or liabilities incurred by the partnership. And absent a written partnership agreement, the death of one partner legally dissolves the partnership. The surviving partners would then have to wind down the business.

Limited Liability Company

A limited liability company (LLC) is an unincorporated business composed of one or more “members.” Most LLCs have an operating agreement, which specifies what to do in the event of a member’s death. Absent such an agreement, Florida law provides that a deceased member is “disassociated” from the LLC. In simple terms, this means that the deceased member’s estate cannot participate in the governance of the LLC, but it retains any rights to receive a share of the LLC’s income or assets.

In a multi-member LLC, it is common for the operating agreement to contain a “buy-sell” provision, whereby the surviving members agree to purchase the deceased member’s interest from their estate. If the LLC only had one member, however, Florida law gives the estate 90 days to either appoint a replacement member or dissolve the LLC outright. Again, if the LLC had an operating agreement, it may provide for a different disposition of the sole member’s interest.

Corporation

A corporation is legally distinct from its owners or shareholders. This means that even if a corporation only had one shareholder, that person’s death does not affect the ongoing legal existence of the corporation itself. Any shares in the corporation simply pass as part of the decedent’s estate, whether by will or Florida intestacy law.

Contact a Pompano Beach Estate Litigation Attorney Today

Even when there are formal agreements in place, litigation can arise over how to dispose of a deceased owner’s interest in their businesses. If you need advice or representation from a qualified Pompano Beach estate and trust litigation attorney, contact the offices of Mark R. Manceri, P.A., today to schedule an initial consultation.