Legal Question in Business Law in Maryland

what happens when a S corp partner dies.

My husbands business partner died unexpectedly, they formed an ''S Corp'' approx. 6 years ago. They were in the Hardwood Flooring business.His sister was listed as his beneficerary BUT now his widow wants to get involved. She thinks that he had money in the business. She has ideas on what to do with the business.??

The business was My HUSBAND and his Partner , a 2 year old Ford Van w/car note and some sanding/refinishing equipment . In our eyes the business owes more then then it has . Half of nothing is nothing correct ? His partner was ill for months and my husband continued to pay him until the day he died and has also given her money from jobs they did togheter.

But what else is owed to her ?

any help is appreciated

thank you !


Asked on 7/26/05, 10:21 am

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: what happens when a S corp partner dies.

The business is a corporation, not a partnership, and therefore your husband and the dead business associate were stockholders. They should have issued stock to one another, as well as to anyone else willing to invest in the business, at the time they formed the corporation.

The stock owned by the deceased passes through his estate to his heirs, who now become shareholders. Perhaps your husband and his associate were wise enough to write up a shareholder agreement, giving one the right to buy out the other in case of death or dissolution of the relationship. If not, hopefully your husband is the majority shareholder so he can maintain control of the business.

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Answered on 7/26/05, 10:54 am


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