Small business owner dies without a buysell agreement - how does that actually play out in probate?
Been listening to a lot of small business podcasts lately and this topic keeps coming up sideways - someone mentions it briefly and moves on. What actually happens to a sole owner's business interest when they die with no buysell agreement and no clear succession language in the estate documents?
The scenarios I keep turning over: a small LLC with two or three members where one dies and the surviving members suddenly have to deal with that person's spouse or adult kids as de facto coowners. Or a sole proprietor where the business just sits there while probate drags on and the value bleeds out
I get that a funded buysell agreement is the cleaner path, but a lot of small business owners just never get there. What actually happens in practice when the estate hits probate without that structure? Does the business interest get appraised and liquidated? Do surviving partners have any leverage, or are they stuck negotiating with whoever inherits the interest?
Asking because I've been thinking about this from the estate side rather than the business side. Meaning what planning documents could have prevented the mess, not what the business owners should have done operationally