I'm working on an instructions doc for my executor (upon my death). I am sole stockholder/owner of a Subchapter-S Corporation. It's currently a personal service company, not an on-going business.

What would the executor do to gain access to any bank accounts of the corporation, and is there any documents I can do in advance to make it easier or quicker. Can the board of directors name an alternate board in the case of death of any of the current members?

I think it work like this. The executor/estate administrator would have to do corporate minutes, naming themselves signers for the bank account, and then they would have to present that to the bank to get a signature card. Eventually, they would do the tax return and dissolve the corporation or alternatively take it over as new CEO/President.

  • You are in control of the corporation due to being a shareholder. When you die the share are left to someone else. They control the company due to their ownership of the shares just like you do now. That might be a starting point for your thinking. Sep 17, 2022 at 1:25
  • @GeorgeWhite - yes, but in the real world, how hard is it for that person to walk into a bank and get access to the checking account. What proof is the bank going to require? They could potentially say it needs probate, or that they need their lawyers to analyze the trust. Seems like there must be a faster way to get around any obstacles that the bank might throw at the administrator/executor. Sep 19, 2022 at 2:22
  • i Agree that it might get complicated and that are wise to consider options now. But it might not be the executor but rather the recipient of the share that needs the blueprint. Sep 19, 2022 at 2:43

1 Answer 1

  1. Set up a testamentary or revocable trust that provides for a sub-trust that can make a subchapter S trust election. Keeping it around for a long time may be the best tax option.

  2. Have someone in addition to the owner on the board who can appoint successor officers. It may be advisable to have secondary officers like a Vice President, who is an authorized signer on the company's accounts.

  3. Keep records of the company well organized in a place know to potential successors.

  4. Suggest an attorney to contact to settle up the affair of the decedent-owner.

  5. This was not necessarily a wise decision in terms of advanced tax planning to set up the company in the first place (because it can't be liquidated without triggering capital gain relative to inside basis). An LLC would have been better. It may be worth consulting a tax attorney or CPA to see if there are options that can better utilize the step up in basis at death, although it could be that there aren't good alternatives at this point.

  6. Normally, succession plans call for locating a qualified successor for an active business, but if it only owns passive assets, this is less of a concern.

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