corporate-law estate-planning
Best practice to prepare Executor to take over Subchapter-S Business
<p>I'm working on an instructions doc for my executor (upon my death). I am sole stockholder/owner of a Subchapter-S Corporation.  It's currently a personal service company, not an on-going business.</p>
<p>What would the executor do to gain access to any bank accounts of the corporation, and is there any documents I can do in advance to make it easier or quicker.  Can the board of directors name an alternate board in the case of death of any of the current members?</p>
<p>I think it work like this.  The executor/estate administrator would have to do corporate minutes, naming themselves signers for the bank account, and then they would have to present that to the bank to get a signature card. Eventually, they would do the tax return and dissolve the corporation or alternatively take it over as new CEO/President.</p>

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<li><p>Set up a testamentary or revocable trust that provides for a sub-trust that can make a subchapter S trust election. Keeping it around for a long time may be the best tax option.</p>
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<li><p>Have someone in addition to the owner on the board who can appoint successor officers. It may be advisable to have secondary officers like a Vice President, who is an authorized signer on the company's accounts.</p>
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<li><p>Keep records of the company well organized in a place know to potential successors.</p>
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<li><p>Suggest an attorney to contact to settle up the affair of the decedent-owner.</p>
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<li><p>This was not necessarily a wise decision in terms of advanced tax planning to set up the company in the first place (because it can't be liquidated without triggering capital gain relative to inside basis). An LLC would have been better. It may be worth consulting a tax attorney or CPA to see if there are options that can better utilize the step up in basis at death, although it could be that there aren't good alternatives at this point.</p>
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<li><p>Normally, succession plans call for locating a qualified successor for an active business, but if it only owns passive assets, this is less of a concern.</p>
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