Do business assets go through probate in Louisiana?

Do business assets go through probate in Louisiana?

On Behalf of | Sep 7, 2019 | Successions And Probate |

The question of whether a business has to go through succession in Louisiana is not a simple one to answer on a general basis. The answer depends on the value of the company’s debts and assets, its ownership structure and several other factors.

Generally speaking, sole proprietorships are largely indistinguishable from individuals in terms of Louisiana probate. When owners pass away, it is likely that — absent of any specific plan — the court would liquidate all of the assets of a business structured as a sole proprietorship and set them against the business’s debts. Other business structures may behave differently upon an owner’s death.

Partnerships and limited liability partnerships another common form of small business. However, these often provide a more robust set of protections against the eventuality of an owner’s death. For informal partnerships, operations could be disrupted. For those governed by partnership agreements, the owners typically make provisions for the death of any of the partners.

Medium-size companies, especially those with operations both in and out of Louisiana, may have to consider more than the state’s succession laws when it comes to selecting an appropriate ownership structure. The choice is not always straightforward. For example, as explained on the IRS website, the federal government could regard limited liability corporations as corporations, partnerships or as having single owners, depending on the forms filed with the service.

As explained on the state’s website, Louisiana has some different laws compared to other states when it comes to the probate process. It is important to look at every business’s exit strategy within the context of these laws as well as any applicable federal rules that govern inheritance or business operations.