INTERVIEW ON THE PRICE OF BUSINESS SHOW, MEDIA PARTNER OF THIS SITE.

Recently Kevin Price, Host of the nationally syndicated Price of Business Show, interviewed Alexander Paykin.

The Alexander Paykin Commentaries

A co-owner dies just as the company is negotiating a major contract. Their spouse calls asking to approve the deal and take over the deceased owner’s management role. The surviving owner needs to sign payroll and make decisions, but the family needs to know what the ownership interest is worth. The answer begins with the company’s legal form and its signed agreements.

In a New York LLC, an assignee of a membership interest generally receives the associated economic rights without automatically becoming a member or gaining management rights. An estate representative, however, may exercise the deceased member’s rights for the purpose of administering the estate. A corporation presents a different voting question: New York law permits an executor or administrator to vote shares held as a fiduciary without first transferring them into that person’s name. Those default rules can interact with an operating agreement, shareholder agreement and buy-sell contract.

A buy-sell agreement should answer questions that grief and urgency make hard to negotiate: Is a purchase mandatory or optional? Who buys? How is the interest valued? When must the decision and closing occur? Will insurance or installment payments fund the price? What happens to management while the estate remains an owner?

For an existing dispute, the practical first step is to assemble the signed documents and ownership records, confirm the estate representative’s authority, and identify who can keep the business operating. The surviving owner should not assume the family acquires an executive role; the estate’s economic interest cannot simply be erased.

Alexander Paykin, Esq. is Managing Director of Paykin Law, a New York firm focused on commercial litigation, real estate matters and complex transactions. Learn more at https://www.paykinlaw.net/attorneys/alexander-paykin-esq.

Document note: This article provides general information and is not legal advice. Rights vary by entity, agreement and governing law.