Type S Corporation

[kentraco]

What is the name of your state?What is the name of your state?Florida

I own 30% of a Florida Type S Corporation, and the recent illness of one of my partners prompts this question:

If a major shareholder dies without leaving a will, does his portion of the ownership automatically pass to whomever the court determines to be his heirs?

 

[ALawyer]

Yes, and in some cases that can screw up your subchapter S election.

 

[NRobs]

Re: Type S Coporation

Do you have a Shareholders Agreement in place? Sometimes, the Shareholders Agreement has a provision that deals with the Repurchase of Shares upon Stockholder Death or Permanant Disability. Also the Agreement may state that no transfer of shares may be permitted if the transfer would cause the termination of the Company's election as an S-Corporation. (ie to a Trust this is not set up to be treated as an eligible Stockholder of an S-Corp).