QUESTION

Business partnership, death, and new marriage

Asked on Nov 18th, 2013 on Business Law - Illinois
More details to this question:
Little complicated but here it goes with the facts. My brother, father and I have owned a business in Illinois for 15 years. Before my father passed away, he had a lawyer draw up a document leaving me 52% of the business and my brother 48%, just in case I ever needed to intervene and take control. My brother does not know this. I have put the document away and since my fathers death have run the business 50/50 with my brother profits, losses, taxes, expenses, etc. now my brother ran off and got married to a girl 20 years younger after knowing her for 3 months. I am concerned that if something happens to my brother that she will get 50% of the business because that is how we have been running it since my fathers passing. Or will the will of my father leaving me 52% controlling interest still prevail.
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1 ANSWER

Appellate Practice Attorney serving New York, NY
First of all, I'm not clear about the facts.  You first state that you, your brother, and your father, have jointly owned a business, but then you state that your father left a will which divided ownership of the business between you and your brother.  Do you mean that your father divided up his 1/3 interest in the business so that you came out with 52% and your brother came out with 48%, or do you mean that, contrary to your first sentence, your father owned 100% of the business before his death? Second, how is the business structured?  If it's a separate legal entity, like a corporation or llc, it's easy enough to divide the equity 52% to 48%.  But if its a sole proprietorship, I don't know  how, as a practical matter, you can divide the business that way. Third, you refer to the document your father signed as a will, but wills require a great deal of formality to be valid.  Was the document properly executed and witnessed?  You should really speak to an Illinois attorney about whether the document your father signed is a valid will. Finally, assuming the document is a valid will, you apparently haven't had it probated, and you don't say how long it has been since your father's death.  Was a different will probated?  What, if anything, did you do to have your father's interest in the business transferred to you and your brother?  Depending on how long you've been operating this way, you may have waived your right, be estopped to claim, and/or have disclaimed, that your father had a will which, contrary to the way you've been operating the business for however long a period of time, left you 52% of the business, and not 50%.  The longer you wait, the more difficult it will be for you to successfully assert a claim to 52% of the business.    Incidentally, if its your brother's new wife that you're worried about, there are other ways to protect yourself, provided your brother will cooperate.  He can sign an agreement with his wife, either before or after marriage, in which she gives up any claim to the business.  He can leave his share of the business to you, not her, in  his will (although, if Illinois law is like NY law, he can't completely cut her out of his estate.)  Or the two of  you can execute an agreement providing that, if one of you dies, the other will have the right to buy his share of the business for a given amount (which doesn't have to be a set amount, it can be a formula, like 3x the prior year's net earnings, or a method, like the amount the busness is valued at by the business's accountant).  If  you pick one of these options, you'd be wise to consult a lawyer about them to make sure they're done right.
Answered on Nov 19th, 2013 at 4:48 PM

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