What Happens to Your LLC if You’re Not Around?

When you’re the sole owner of an LLC, and the only Manager of LLC, what happens to your business if something happens to you?

I think the answer is largely going to depend on state law and everyone’s individual situation.

Something I suggest for couples is to have the non-owning spouse be a Manager of the LLC, or at least have them added to the LLC’s bank account as a signer. Then your spouse can at least access the funds in the LLC.

On the other hand, if it’s your baby, and you don’t want your spouse to have regular signing authority over the LLC, you can also prepare a Limited Power of Attorney, one that gives your spouse the right to run the LLC ONLY in the event you can’t speak for yourself. You can put the signed, notarized POA in a drawer, or on record with your attorney or incorporating agent.

Whatever you do, having a back-up plan in place is a great idea. Could a former spouse try to take a run at your business? Sure. How successful he/she would be would depend on a number of things, but any way you look at it, it’s going to be extra headache, emotional upset and financial strain on your family at the worst possible time.

The other worst-case scenario would be the reverse situation – you’re hurt, unable to talk, and no-one in your family can either take over the business or access any of the money in the business’s account. Banks are very conservative, and it may take a court order before someone could cash a check for you … more trouble, more upset, more money spent.

Also, feel free to take the word “spouse” out of the equation, to be replaced by friend, family member, child, etc. There’s nothing we’re doing here that is limited to married couples.

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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