Building a successful Business takes years of dedication, hard work and personal sacrifice. As a Business Owner, you want to ensure your Legacy continues even after you’re gone. But what happens if you pass away suddenly without a Will, a Trust, or clear instructions for Business Succession? This is known as passing away “Intestate.”
How Oregon Law Handles Your Estate
When you die “Intestate,” which means you pass away without an Estate Plan in place, Oregon laws (AKA intestacy laws) decide who gets your property. Most of your Assets will go through the Probate Process, which can be both costly and time-consuming for your Estate, unless the Assets are otherwise exempted.
Oregon’s Intestacy Laws create an automatic chain of inheritance based upon your closest living relatives. If you are married, your spouse typically inherits your entire estate, whether or not you have children together. If you have children from a previous relationship or marriage, your current spouse gets part of your estate, while your children get the other.
Your Business Type Affects What Happens Next
Different Business Structures face different outcomes when the Owner dies without an Estate Plan in place:
1. Sole proprietorship: The Business itself ends/winds up when you die, but your Business Assets become part of your Estate and pass to your Heirs through Oregon’s intestacy laws.
2. Limited Liability Company (LLC): Well-drafted LLC Operating Agreements should always include Business Succession Plans or language. If the Company is a Single-Member LLC, with you as the Sole Member, it will dissolve when you pass away, similar to the Sole-Proprietorship.
However, if you have a Multi-Member LLC, with no Succession Plan or language in place, your Ownership Interest may go to your Heirs when you die, while the other LLC Members may continue the Business. This can be an undesirable outcome for the remaining LLC Members, as they may be forced to operate the Business with your Heirs, who might have no interest in the Company or any necessary business knowledge/acumen to run it with. It can be an equally undesirable outcome for your Heirs, as they may find themselves stuck in an LLC Membership, where they don’t have an automatic right to transfer or sell their Ownership Interest.
3. Partnership: In a Partnership, the Partnership Agreement determines what happens. Many Partnerships dissolve when a Partner dies unless the Agreement says otherwise.
4. Corporation: Your Shares pass to your Heirs through the Intestacy Laws in Oregon, but the Corporation continues operating with the current executives running the Business.
This can lead to unforeseen consequences for the Company and the remaining Shareholders, however, if the Shareholder’s Agreement doesn’t contain language that addresses what should happen upon the death of a Shareholder.
Note that these are just basic examples of what can happen when you die without an estate plan and there is no Business Succession language in your Company’s formation documents. Your Business may also get into complex situations, without an Estate Plan in place, especially if multiple Heirs stand to inherit your Business Interests after you pass away.
Protect Your Business Legacy with an Estate Plan
Having a strong Estate Plan in place, coupled with robust Business Succession Planning language in your Company documentation, is the best way to ensure the survival of your Business and to preserve your Legacy.
Speaking with a Seasoned Estate Planning Attorney, like Natalie Wetenhall of Evergreen Law Group, LLC, can help you create a Solid Estate Plan that protects and preserves your Business Succession, as well as your Loved Ones’ Interests after you’ve gone. Give Natalie’s office a call today to set up a complimentary consultation call.
