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Ask a Lawyer -- Corporations
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Brought to you by MedLawPlus.com®-- Corporate Bylaws and initial board of directors resolution Price: $14.99 (free trial) |
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Question: My husband is forming a S corporation in VA, listing himself as President/Sec. Listing no one but himself. If something were to happen to him, who would the corporation control be issued to if no one else was listed. We both have children from other marriages and we have been married over 10 years. Response: A good question. He is probably also the sole shareholder and the only one with check signing authority on the corporate checking account. If he were to die, then the corporation would have no officers nor directors. A special meeting of the shareholders then would need to be called to elect new directors who, in turn, will appoint new officers. It may be that the business cannot function without your husband so the only duty of the new board / officers will be liquidate the business. But without other estate planning techniques in place, the election of a new board cannot happen until a probate estate is opened and letters of administration issued to an executor. One option to consider is to place the stock in revocable trust so that the successor trustee may step in an vote the shares at the death of your husband. Another option to make a transfer on death designation on the corporate share certificate. According to this web site, Virginia has passed a Transfer on Death law for securities. Check with a local lawyer to verify this. Having said the foregoing, it might be a bit premature to worry about this issue. Many businesses never get out of the crib. Until the corporation is up and running with significant assets and/or business, this is probably a front burner issue. Submitted: 03/12/2009; Karen, VA Response: 03/16/2009; JJR Add A Comment |
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