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What are a personal representative’s rights to run a business?

On Behalf of | Apr 28, 2022 | Estate Planning

For many Texans, creating an estate plan goes beyond determining how their personal assets like a bank account, real estate, sentimental items, automobiles and more will be distributed after death. While this is an important aspect of a comprehensive plan, other considerations may come to the forefront. If, for example, the person creating the estate plan – the testator – has a business they want to keep operating after they have passed away, they will need to account for that in the estate plan. The court may name a personal representative for the business. However, it is important to be aware of what the personal representative is legally allowed to do in terms of the business and the testator might want to account for that.

A personal representative is granted certain business authority under the law

When a personal representative is named and given the authority to run a business, they will have certain powers. There are certain circumstances under the law where the powers will be limited. For example, there might need to be a court order for the person to make pay calls and assessments or insure the estate against liability.

Along with the court-ordered powers, the personal representative can essentially run the business as if it was their own. They can hire people fire people and pay them; they can accrue debt for the business and get liens against its assets; they have the right to buy property and sell it as part of running the business; and they can sign leases and contracts. A qualified personal representative who understands their role and can run the business is essential. This is not just for the testator’s interests, but their family as well.

A qualified personal representative can protect a business in an estate plan

When crafting an estate plan to account for every aspect of property and there is a business at stake, the personal representative will be a key component in having the testator’s goals achieved even after they are gone. A business can be a person’s life’s work and they want to know it is in good hands. In addition, the personal representative should be aware their legal rights and obligations when agreeing to take on the responsibility. It is important that the law is followed. If it is not, others can question it. To achieve the desired goals and ensure the rules are followed, it is useful to have experienced assistance that understands both business and estate planning.