What Happens to Your Business in New York State When You Die?

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In the course of providing legal counsel to businesses and high-income professionals across New York, one question we frequently encounter concerns the fate of a business or business interest when an owner passes away. This issue, while complex, is crucial to address, particularly for those involved in disputes related to employment, matrimonial matters, trusts and estates, or business litigation.

When a business owner dies, the aftermath can significantly impact the deceased's family, employees, business partners, and stakeholders. We'll explore what happens in New York State to different business structures and the owner’s interest in the business.

Sole Proprietorship

The simplest form of business, a sole proprietorship, does not exist separately from its owner. When the owner dies, the business effectively ends, although the executor or personal representative can continue the business during probate. The business assets and liabilities become part of the owner's personal estate, and will be distributed according to his or her will or New York state intestacy laws.


In a partnership, the death of a partner will have varying implications, largely dependent on the partnership agreement:

  1. Partnership Agreement:If a buy-sell clause is included, surviving partners typically have the option to buy the deceased partner's share.
  1. Dissolution: In New York, unless the partnership agreement specifies otherwise, a partner's death causes the partnership to dissolve. This leads to liquidation of the partnership's assets to pay debts, with any remaining assets being distributed to the deceased partner's estate and surviving partners.

Limited Liability Company (LLC)

LLCs provide a more formal structure, with the death of a member being influenced by the Operating Agreement and state law:

  1. Operating Agreement: This agreement might detail what happens to a member's interest upon his or her death. It could involve other members buying out the deceased member's interest, or possibly a transfer of the member interest, or only of the related economic interest, to a designated individual.
  1. New York State Law: If no operating agreement exists, or it doesn't specify what happens upon a member's death, New York LLC Law applies. This could result in dissolution of the LLC if there are no remaining members.


In a corporation, shares can be transferred upon a shareholder's death as specified in their will or estate plan. The implications can vary:

  1. Shareholder's Agreement or Bylaws: These might specify what happens to a shareholder's shares upon their death. There could be a buy-sell agreement in place that requires the corporation or other shareholders to buy the deceased's shares.
  1. Inheritance: If there are no specific provisions in the Shareholder’s Agreement, then shares generally pass by will or otherwise to the deceased shareholder's heirs, potentially granting them voting rights, depending on the type of shares held.

Estate Beneficiary Rights and Role of Trust and Estate Litigation

Estate beneficiaries or heirs may inherit an ownership interest in a business, but their rights can vary significantly depending on the type of business entity and the provisions of the deceased's will or estate plan.

As a beneficiary, you may have the right to receive information about the estate, approve or contest the executor's decisions, and receive your share of the inheritance. However, understanding and navigating your rights can be complex, especially when it involves business interests.

This is where a trust and estate litigator can help. A litigator can:

  1. Protect Your Rights: Ensure that you receive all information and inheritance due to you.
  1. Contest Unfair Actions: If you suspect that the executor is not fulfilling their duties or is acting unfairly, a litigator can represent you in challenging their actions.
  1. Resolve Disputes: If disputes arise among beneficiaries or between beneficiaries and the executor, a litigator can help mediate and resolve these issues or represent you in court.
  1. Navigate Business Interests: If your inheritance includes business interests, a litigator can help you understand your rights and responsibilities. They can also represent you in negotiations or disputes relating to these interests.
  1. Challenge or Defend the Will: If there are reasons to believe the will is invalid or has been tampered with, or is the result of undue influence, among other things, a litigator can help challenge it. Similarly, if someone else challenges the will, a litigator can help defend it.

In conclusion, the fate of a business or a decedent’s interest in the business upon death is complex and varies depending on the type of business and the arrangements made by the deceased owner. A clear succession plan, articulated in estate planning documents, can make the process smoother and less stressful for those left behind. Furthermore, as an estate beneficiary, you have rights that can be protected and enforced with the help of a skilled trust and estate litigator.

Remember, the future is unpredictable, but with effective legal strategies, you can ensure your business thrives even after your demise, and that your beneficiaries are protected.

Consult with your trust and estate transactional counsel to establish a plan that protects your business and your legacy. If you don’t have such counsel, then contact us and we will introduce you to trust and estate counsel to create your plan; and we will be here for you should related litigation arise.

If you are facing similar concerns or if you have questions about what happens to your business, please feel free to contact us here. We have many years of experience handling such matters and will be able to assist you in resolving the dispute.

To learn more about these topics, you may want to review our information provided on these pages: Business Dissolution & Litigation, Shareholder Disputes, LLC Disputes, Partnership Disputes, Trust & Estate Litigation, and Business Litigation.

You may learn more about us and how we operate by visiting these pages: About Us, What Sets Us Apart, and Learn More About Us.

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