It could happen today. A business owner dies. Now what? The business entity continues in perpetuity even though the owner has passed. How do you know who is authorized to act on behalf of the business? Or what if the owner sells and wants to transfer ownership interest? Learn how to handle these situations compliantly and avoid loss.
- Understand what steps are legally permissible upon the business owner’s death or sale of ownership interest
- Determine who can act for the business after the owner dies or sells ownership interest
- Distinguish which parties can be held liable for repayment of the loan and/or guaranty after the owner dies or sells ownership interest
- Identify situations when the business owner’s death or sale of ownership interest can and cannot constitute a loan default
- Use the proper documents to change authorized signers on the business entity’s deposit account when the owner dies or sells ownership interest
What happens to loans or deposit accounts when a business owner dies or sells their ownership interest? Except for a sole proprietorship, individual business owners are separate and distinct from the legal business entity (i.e., corporation, limited liability company, partnership, trust, etc.). When the individual owner dies, the legal entity continues to exist. Likewise, if the individual sells his/her ownership interest, the legal entity continues to exist, although ownership has changed. In both situations, your institution must determine who is authorized to act on behalf of the business entity regarding its loans and deposit accounts.
This webinar will explain the proper procedures for when the business owner dies or sells their ownership interest, including the documents that must be reviewed and the actions your institution must take. It will also explain how to determine who is authorized to act on behalf of the business entity after the owner dies or transfers ownership interest.
Elizabeth Fast, JD & CPA, Spencer Fane LLP
Elizabeth Fast is a partner with Spencer Fane LLP where she specializes in the
representation of financial institutions. Elizabeth is the head of the firm’s training division.
She received her law degree from the University of Kansas and her undergraduate degree
from Pittsburg State University. In addition, she has a Master of Business Administration
degree and she is a Certified Public Accountant. Before joining Spencer Fane, she was
General Counsel, Senior Vice President, and Corporate Secretary of a $9 billion bank with
more than 130 branches, where she managed all legal, regulatory, and compliance