Does ownership/stock in a privately held company pass inside an estate or does it get passed to beneficiary if owner dies?
Does ownership in the form of stock in a privately held company go directly to beneficiary at time of owners death, or will it pass thru his estate? Corporation started in Maryland, but has offices in PA, WVA, and VA.
Mark W. Oakley
In the absence of a contrary provision in a shareholders or buy-sell agreement, stock held in the sole name of the deceased will pass to the heirs as an asset of the probate estate. Most privately held companies, if organized properly, have shareholder agreements which address what happens to a shareholders stock in the event of death, disability, retirement and divorce. You need to inquire of the corporation whether any such agreement was made.
If the shares are held in an IRA or other qualified retirement plan, they will pass to the beneficiaries if the IRA, regardless of whether they are public or privately held companies. If they are held jointly with another, the survivor will get the shares. Moreover, if the shares are held in a TOD account (transfer on death), the shares go to the designated beneficiary.
Otherwise, the shares will likely pass through probate/will.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
Shares of stock in a corporation will generally pass to the heirs through the estate. LLC interests may be treated differently, depending on the terms of the LLC's operating agreement. I have moved this question to estate planning, to catch the attention of attorneys specializing in this area.
My response is not to be construed as creating an attorney-client relationship and it is not offered as legal advice. Hopefully, this discussion will steer you in the right direction if you choose to hire an attorney.