Are you in the position of having to take over after your firm's sole proprietor passed away? You now have a heavy responsibility, but there are guidelines that you can follow to ensure a smooth transition if the sole proprietor dies.
What to Do if Your Accounting Firm's Sole Proprietor Dies
Succession Planning is the Key to a Successful Transition
If the sole proprietor dies, what comes next? The key to a smooth transition is succession planning. This is a plan that will give you two main options:
In the first case, you decide to sell the business. You can keep all of the profits, at least those which you are solely entitled to. However, you can also give a share of the resulting proceeds to family members, business partners, former employees, and whoever else you may designate.
If you prefer to keep the company going, but you're not the right person for the job, your best bet will be to name an official successor to take over the company and move it forward. This can be a family member or a member of the board. If they accept the position, they become the official successor.
What if There is No Official Plan for Succession?
After the death of the sole proprietor, it may come to light there is no official plan for succession. If this occurs, you have a number of options to choose from. You may prefer to buy the firm and take over as the official successor. You may also sell the firm to heirs or appoint heirs to take the reins.
If you prefer to take the reins, you can officially buy the firm. However, you may have to justify this decision against the arguments of other family members or partners who contest it. There may be legal action that could result in you being confirmed as the new owner or ousted from the organization.
You may prefer to sell the firm to the heirs that may have been officially named in the will of the deceased sole proprietor. If no heirs are named, it may fall to you to designate heirs to pass the company on to. If this is the case, you may once again find yourself facing legal challenges.
What Can You Do if You Find Yourself the Designated Heir?
If you discover that you are the one who is designated to run the firm after the death of a sole proprietor, you have many options. You may choose to keep the structure of the firm almost the same as your predecessor arranged it.
You may instead prefer to make sweeping changes. If this is your preference, you will need to justify these decisions, especially to those who were also designated in the will of the deceased.
Contact an Expert Accounting Firm for More Advice
You don't have to weather the storm alone after your sole proprietor dies. There is helpful advice available from experts in the accounting industry. Fusion CPA can offer solid aid and counsel to help the business stay firmly on track. Contact us to learn more about what we can do.
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.