Buzz and Pete manufactured and sold sporting goods for years. As college buddies, they started their business on a shoestring. The business grew steadily. Unfortunately, Pete died in a skiing accident, leaving Buzz to hold their business together. Buzz – and the executor of Pete’s estate, his brother Rob – that is. Buzz was uneasy about how Rob’s authority as executor would affect his business.
An Executor’s Responsibility Over Estate Assets.
When someone dies, an executor begins the process of settling their estate and distributing their assets. It’s best if a valid Arizona Will was left by the decedent.
The executor, also known as a personal representative, begins gathering and protecting the estate assets. In most cases, the executor proceeds with settling the estate without asking for court approval on transactions related to the administration of the estate.
One important duty is to inventory the estate assets, including their fair market value. Calculating the value of a business may be a bit more difficult than determining the value of other assets. The executor has the authority to hire experts to handle appraisals and valuation. Estates involving business interests may be more difficult to settle.
The Executor and Your Business.
As executor, Rob may do the following business-related tasks:
- Retain his brother’s assets during administration;
- Perform, compromise, or refuse to continue any of his brother’s contracts that relate to the estate;
- Repair or alter buildings;
- Enter into leases;
- Vote stocks and other securities;
- Insure estate assets, including his brother’s business;
- Sell or exercise stocks;
- Agree to actions involving a business interest, including reorganization, consolidation, merger, dissolution or liquidation;
- Continue his brother’s unincorporated business ventures; and
- Incorporate his brother’s business if it is not done already.
The executor over business interests will be guided by or influenced by the type of business involved. Organizational documents may address the death of a partner. Also, hopefully, the deceased business owner prepared business succession plans to address his or her death.
When the Executor Just Isn’t Working Out.
If Buzz really feels that Rob is taking action that will harm the business, he can petition the court for relief. After holding a hearing, the court may temporarily restrain the executor from taking action that will harm the business.
Maybe Rob is not working out as executor. His appointment can be terminated, meaning he no longer has authority to represent the estate. However, he is still liable for anything he did before his termination. He also has a duty to account for his actions as personal representative.
Is Your Business Protected?
To discuss your concerns with an experienced Arizona lawyer, call us at (480) 418-8448 or check out one of our free seminars. We provide estate planning advice for clients throughout Arizona, including Ahwatukee, Chandler, Gilbert, Sun Lakes, Mesa, and Tempe.