Do I have to buy out my deceased partners widow?

[quincy]

Who cares?

 

[Mark_A]

Who cares?

It depends on whether he is a Pex A guy, or a Pex B guy.

 

[quincy]

So … irrelevant.

Did you just discover Google or something?

 

[adjusterjack]

Offer her half the debt.

 

[Mark_A]

So … irrelevant.

Did you just discover Google or something?

No, I have known about Pex plumbing (A and B) for a long time, having watched many home building and home improvement shows. Quincy, I think you are probably a Pex B type of person.

 

[quincy]

The wife might not have inherited any interest in the business at all, whether its business assets or business debts.

 

[Pexman]

If there is no written contract or agreement, then it is very unlikely that your are obligated. Even if you were obligated to buy her out, it doesn't seem to me that the price would necessarily be the amount of the insurance settlement unless that was also agreed to in writing.

Was your partner's wife a witness to any verbal discussion between you and your partner, or was all her information about what was supposed to happen gotten verbally from her husband?

No, she was no there when we talked about it.

 

[Pexman]

What do your corporate documents and the insurance policy say about the death of one of the owners?

The spouse of one of the partners in a business does not necessarily inherit the deceased spouse’s interest in the business. This can depend in part on the type of business and its requirements for operation (e.g., state licensing).

The $250,000 life insurance policy payout also does not necessarily have to be used to buyout any inherited interest in the business held by the deceased spouse.

I suggest you have an attorney in your area review with you all pertinent business and insurance documents and advise you accordingly.

We did not have a succession plan in place, so as far as I understand his stake will go into his estate. The insurance policy just lists me as the beneficiary.

 

[Pexman]

Are you in possession of the policy? Does the policy list you as beneficiary? Even if it does, you need to check with the life insurance company to make sure he didn't change the beneficiary to his wife at some point. If he did, then you won't see a nickel of that death benefit.

Did you and your "partner" own the business jointly with right of survivorship or did your corporate (or other entity) document provide for either of you inheriting the other half. If there was no provision made for that, then she could already be your new partner. If the business or its assets have any value you may have to address buying her share.

Also remember, Texas is a community property state. That may or may not be an issue but it's something to address.

You should be talking to a business attorney before doing anything that could come back to bite you in your assets.

I am the only beneficiary listed on the policy. I am also the owner of the policy so I'm pretty sure I would need to okay changes like that. Either way I have been in contact with the insurance company and I should be getting the money in a few weeks. His stake in the company just went to his estate, but his estate is still in probate I believe because there was some issues with personal debts as well.

 

[Pexman]

1. Has the insurance company notified you that you are the beneficiary to the life insurance policy on your former partner and that you will be getting $250,000?
   
   
2. What exactly does "supposed to be getting" mean?
   
   
3. Did you pay the premiums on his policy (naming you as beneficiary)?

1. I have been in contact with the insurance company and I am the only beneficiary and the timeframe they gave me still has a few weeks.

2. I honestly don't know how to more simply explain the meaning of that. No snark intended.

3. Yes

 

[Mark_A]

No, she was no there when we talked about it.

Texas law doesn't require a partnership to have a written agreement to be legally valid. A partnership can be formed through a verbal agreement or even simply by the way a business operates. However, since you say that the buyout terms (upon death of one partner) were only vaguely discussed and not officially agreed to, and the wife nor any other living person was not a witness to those verbal discussions (and there is no written agreement), I don't think she has much of a legal case, especially if you offer her your share of the business for free.

 

[Mark_A]

1. I have been in contact with the insurance company and I am the only beneficiary and the timeframe they gave me still has a few weeks.

2. I honestly don't know how to more simply explain the meaning of that. No snark intended.

3. Yes

Sounds good for you. I would offer the ex-partner's wife your share of the business and take the $250K and do something else (new job or new company).

 

[quincy]

We did not have a succession plan in place, so as far as I understand his stake will go into his estate. The insurance policy just lists me as the beneficiary.

Once the estate is settled, you will have a better idea of what you face with the widow. I recommend you consult with an attorney in your area at that time.

Forum responses can sometimes provide confusion rather than clarity because we are not able to access all of the facts necessary to provide definitive answers.

 

[bcr229]

Have you had a forensic accountant look over your business records to ensure that your deceased partner wasn't embezzling business funds to support his addictions?