If you’re a business owner in California, you’ve likely put in years—maybe even decades—of hard work, energy, and resources to build your company and business interests. But what happens to your business if you die without a will?

It’s not a pleasant thought, but it’s an incredibly important one. Without a proper estate plan, including a California will or trust, the future of your business could be left in the hands of the court — and that rarely plays out the way you’d want. 

As a California estate planning law firm, we at Best Coast Estate Law, P.C. help business owners protect what they’ve built, whether they have sole proprietorship or a partnership agreement. 

California Intestate Succession: The State’s Plan for Your Estate

When someone dies without a will in California, their estate is subject to the rules of intestate succession (a court-supervised process where assets are distributed to heirs based on a preset legal formula, starting with spouses and children). While this might sound straightforward for personal assets, things get more complicated when a business is involved.

What Happens to a Business when the Owner Dies?

Basic Rules:

If the sole business owner dies without a will or a trust, the business becomes part of a probate estate and enters the probate process. That means it will be managed—and potentially sold or dissolved—by a court-appointed administrator. 

Here’s how it can unfold:

  • Court Involvement – The probate court will oversee the distribution of business assets, which can take months, or even years, depending on the estate’s complexity.
  • Lack of Continuity – Without clear instructions, employees, clients, and business partners may be left in limbo. Operations could grind to a halt during the legal proceedings.
  • Family Disputes – If multiple heirs are entitled to a share of your estate, they may disagree on how to handle the business. Should it be sold? Should someone continue to run it? Will one person get sole proprietorship? Disputes can lead to costly litigation or forced dissolution.
  • Tax Consequences – Poor planning can trigger tax liabilities that affect an estate’s value and the business’ financial health. While estate tax may not apply to everyone, it’s still something to be aware of, especially for larger estates.

Can Spouses Inherit a Business?

As a general rule, only legal spouses and registered domestic partners have inheritance rights under California law. It’s important to note that California does not recognize common law marriage, so even if you’ve lived with your partner for many years, they may not be entitled to inherit or manage your business if you die without a will—unless you’ve legally documented your wishes.

In California, if you die without a will and own a business, your minor children could inherit your share—but they can’t legally manage it. Instead, a court-appointed guardian would take over until they reach adulthood. To avoid a court-appointed guardian, it is important to outline your wishes in a will and other estate planning documents.

Can You Inherit an LLC? 

Different Business Structures, Same Risk

If your business has a partnership agreement or an LLC, it may have a formal operating agreement or buy-sell agreement that outlines what happens if one partner passes away. But if no such documents exist—or if they’re outdated—your interest in the business could still be subject to probate.

For example, in a multi-member LLC, your ownership interest might pass to your heirs, who may or may not be interested in managing the business. This can create tension among surviving members and disrupt operations. When you have a single-member LLC, the heir obtains sole proprietorship.

Planning Ahead: Protect Your Business Interests 

The good news is that with some strategic estate planning, you can avoid these risks and ensure a smoother transition for your business. 

1. Create a Will or Trust

A will allows you to name beneficiaries and designate a personal representative. A revocable living trust is even better for business owners, as it allows your assets—including your business—to avoid probate altogether. Our Burbank estate lawyer can help. 

2. Draft a Buy-Sell Agreement

This is a legal contract between business partners that outlines what happens to an owner’s share if they die, retire, or become incapacitated. It can ensure a smooth transfer of ownership and prevent disputes.

3. Appoint a Successor

Identify who should take over or manage your business in your absence. This could be a family member, trusted employee, or business partner.

4. Fund Your Trust Properly

If you establish a trust, make sure your business is actually titled in the name of the trust. Many people set up trusts but fail to fund them, which means their assets still end up in probate.

5. Consider Key Person Insurance

This type of life insurance policy provides your business with funds if a key individual (like the owner) passes away, helping to maintain operations or fund a buyout.

Los Angeles Estate Planning Attorney

Dying without a will in California leaves your business vulnerable to probate, delays, disputes, and possible closure. 

At Best Coast Estate Law, P.C., our experienced estate lawyer works with California business owners every day to build estate plans that protect their interests. Whether you own a small family-run shop or a growing company, we’re here to help you plan for the future with confidence.

Reach out today to schedule a free consultation.