An intestate estate is one in which a person does not have a settled will or estate plan in place when they pass. Intestate succession is the process through which the California probate court assigns assets to a person’s heirs. This can include business assets.
A business asset going through probate does not get special treatment
The probate court will treat a business like any other type of asset, such as a home or a vehicle. According to intestate succession, the asset will go entirely to a spouse unless there are other relatives of the deceased such as children, parents and so forth.
If there are other relatives, the state will apportion the business among the heirs, often with the spouse taking the most significant single share – between one-third and one-half of the estate.
What happens to a business in this process?
A business going through intestate probate may suddenly find the consolidated ownership divided among several new parties. As the law looks only at relationships and not suitability or responsibility, the new owners may not have the same vision for the company. This can quickly destabilize a business.
Is it time to update your plan?
Most business owners take great pains to settle their estate plans. Often this can be part of a succession plan they’ve developed. However, estate plans do not change on their own. If your business has changed, if you’ve opened a new business, if there are new assets in your portfolio, it’s time to change your estate plan.
Keeping your estate plan up to date is one of the best ways to ensure your business remains strong for the future.