If the owner wishes the business to continue after his or her death, he or she must state in a will that he or she wants the executors and trustees to run the business. The executors and trustees are not responsible for the deceased's prior business debts as well as subsequent business debts incurred while carrying out their duties. The will also should state how the business is to be disposed of.
The executor is personally:
a) Accountable to the estate and business creditors.
b) Liable to the heirs of the estate for any losses.
c) Cannot receive any of the profits.
In case of no buy sell agreement:
The business assets and good will are deemed to have been disposed of separately:
a) The executor needs to find a buyer immediately
b) fair price for business
c) Settle the selling quickly, so as to find proceeds for the estate.
Most wind-ups take on the characteristics of a forced sale and the accounts receivable and the inventory shrink to less than their fair market values.
To offset this, the business owner should do two things. The first has to deal with the powers given to the executor in the will. The sole proprietor will also want to consider the following points.
1. To retain and operate the business temporarily until the best buyer can be found under favorable conditions or change the form of business.
2. Given the executor the power to sell the business without restriction and to determine the price and how it is paid. This power would include the right to borrow funds for operating capital or estate settlement needs.
You can see if there is no prearrange buy sell agreement in place before the death of the owner. The business must face number of uncertainty that is no good for employees and the heirs.
I hope this information will help. If you need more information. please visit my home page at
Kyle J. Norton
All rights reserved. Any reproducing of this article must have all the links intact.
I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990