Don’t Let a Probate Judge Decide Who Runs Your Company
You built your business through years of decisions, risks, and relentless effort. But if you die or become incapacitated without a coordinated plan, a Michigan probate judge—someone who has never set foot in your office—could end up deciding who runs your company, whether it gets sold, and how the proceeds are divided among your heirs.
This is not a hypothetical risk.
It happens to Michigan business owners regularly. Operations freeze while the court appoints a personal representative. Under MCL 700.3709, that personal representative has a right to take possession or control of the decedent’s property—including the business.
Key employees leave because no one with actual business knowledge has authority to act. Co-owners clash with surviving family members over buyout terms that were never documented. Customers move on. And the business that took decades to build can lose most of its value in a matter of months.
The core problem is not a missing will or an outdated trust. The core problem is that most Michigan business owners treat business succession planning and personal estate planning as two separate projects—if they address them at all. When those plans are not coordinated, even well-drafted documents can contradict each other, creating the exact chaos the owner was trying to prevent.
Coordinating your business succession plan with your personal estate plan is how Michigan business owners protect their companies, their families, and their legacies—all at once.
Why Your Business Needs Its Own Estate Plan
A business is not like a bank account or a house. You cannot simply leave it to someone in a will and expect it to function the next day. A business is an operating entity with employees, contracts, vendor relationships, regulatory obligations, and cash flow demands. It requires active management from the moment an owner dies or becomes incapacitated—not weeks later, after a probate court gets involved.
Under Michigan law, when a business owner dies without a succession plan, the business interest becomes part of the probate estate. The court-appointed personal representative may have zero experience running the business but holds broad legal authority over its operations. Under MCL 700.3715(1)(z), a personal representative may continue a business or venture in which the decedent was engaged—but only for four months after appointment without court approval. After that, the personal representative must either incorporate or convert the business, obtain a court order to continue, or wind things down.
The result is a leadership vacuum governed by statutory deadlines, not business realities. Checks can’t be signed by the right people. Contracts can’t be executed by someone who understands the relationships. Employees don’t know who’s in charge. And if there are co-owners, their rights under any existing operating agreement may conflict with the probate process entirely.
Many Michigan business owners assume that having a will or a trust is enough. It is not—unless that will or trust is specifically coordinated with the business’s governing documents, ownership structure, and succession strategy.
Identifying the Role of the Business in Your Estate
Before you can coordinate anything, you need to understand what your business actually represents in the context of your personal estate. This assessment drives every decision that follows.
Operating Companies vs. Professional Practices
The succession strategy for a Metro Detroit manufacturing company with 50 employees looks very different from the strategy for a solo medical practice or a two-partner law firm. Operating companies can often be transferred to family members, key employees, or outside buyers. Professional practices, by contrast, may require specific licenses to operate, meaning the business itself may not be transferable—only its assets and goodwill.
Valuation and Liquidity
For many Michigan business owners, the business is the single largest asset in their estate—often representing 60% to 80% of total net worth. That concentration creates a dangerous liquidity problem. The business may be worth millions on paper, but it does not generate cash that surviving family members can use to pay estate taxes, fund living expenses, or equalize inheritances among children who are not involved in the business.
This is where coordination becomes critical. Without it, the estate may be forced to sell the business at a steep discount—or worse, liquidate it entirely—just to cover obligations that proper planning would have addressed in advance.
Core Business Succession Tools Every Michigan Owner Should Know
Coordinating business succession with personal estate planning requires specific legal instruments. These tools work together to ensure control passes smoothly, funding is available, and family dynamics do not derail the transition.
Business succession documents—buy-sell agreements, entity restructuring, voting and non-voting interest creation—are separate planning engagements from a personal estate plan. They are priced based on the complexity of the business structure, number of owners, and specific goals involved. But they must be developed in coordination with the estate plan, not in isolation from it.
Buy-Sell Agreements
A buy-sell agreement is the backbone of most business succession plans. It is a binding contract among co-owners (or between an owner and the business entity) that governs what happens to ownership interests when a triggering event occurs—death, disability, retirement, divorce, or voluntary departure.
Without a buy-sell agreement, a deceased owner’s interest passes to their heirs through probate or a trust. Those heirs may have no interest in the business, no ability to run it, and no obligation to cooperate with surviving co-owners. The result is often a forced buyout at an unfavorable price—or protracted litigation that drains the company’s resources.
A properly drafted buy-sell agreement establishes the purchase price or valuation method in advance, identifies who has the right (or obligation) to buy, and sets the terms of payment. It should be reviewed and updated regularly—particularly when valuations change significantly or ownership percentages shift.
Key-Person Insurance
Buy-sell agreements only work if there is money to fund them. Key-person life insurance provides the cash needed for surviving owners or the business entity to purchase a deceased owner’s interest without borrowing against the company or liquidating assets.
For a Michigan business valued at $2 million, the cost of a key-person life insurance policy is a fraction of what the company would lose in a fire sale or forced liquidation. Yet many business owners treat insurance as an afterthought rather than a structural component of their succession plan.
Voting vs. Non-Voting Interests
One of the most effective tools for coordinating business succession with estate planning is the creation of voting and non-voting ownership interests. This structure separates economic rights (receiving profits and distributions) from control rights (making management decisions).
A Michigan business owner can retain voting interests during their lifetime—maintaining full operational control—while transferring non-voting interests to children, trusts, or other beneficiaries. This accomplishes several goals simultaneously: it reduces the taxable estate, begins the wealth transfer process, and ensures that the people running the business are not forced to take direction from family members who have no operational role.
For LLCs, these structures are established through the operating agreement under Michigan’s Limited Liability Company Act (MCL 450.4101 et seq.). For corporations, similar results are achieved through classes of stock with different voting rights.
Keeping the Business Out of Probate
Michigan probate is public, slow, and expensive. For a business that depends on speed and confidentiality, probate is the worst possible scenario. The good news is that keeping a business out of probate is straightforward—if ownership is structured correctly.
Revocable Living Trusts
The most common approach is transferring business ownership into a revocable living trust. When the business interest is properly titled in the name of the trust, it passes to successor trustees and beneficiaries without ever entering probate. The successor trustee can step in immediately—often the same day—with full legal authority to manage or transition the business.
This matters because probate in Michigan can take six months to over a year to complete, even for straightforward estates. For a business that cannot wait six months for someone to have legal authority to act, a revocable trust is not optional—it is essential.
Holding Entities
Some business owners use a holding entity—typically an LLC or a family limited partnership—to own interests in one or more operating companies. The holding entity itself is then owned by the trust. This layered structure provides additional asset protection, simplifies multi-business succession, and can offer significant estate and gift tax planning advantages.
The critical detail: ownership must be properly titled. A trust that says “I leave my business to my children” accomplishes nothing if the business is titled in the owner’s individual name. The business interest must be formally transferred to the trust or holding entity, with updated operating agreements, articles of organization, and any third-party consents that may be required.
Aligning Succession with Personal Planning
This is where most Michigan business owners’ plans fall apart. The business succession plan says one thing. The estate plan says another. The operating agreement says something else entirely. And when the owner dies, three competing sets of instructions create exactly the kind of conflict the owner was trying to avoid.
Coordinating Trust Beneficiaries with Operating Agreements
If a revocable trust names all three children as equal beneficiaries—but the operating agreement restricts membership transfers to only those members approved by a majority vote of existing members—the trust’s instructions may be unenforceable. The surviving members could block the transfer entirely, leaving the deceased owner’s family with an interest they cannot use or sell.
Coordination means ensuring that the trust provisions, the operating agreement, and the buy-sell agreement all point in the same direction. Every document should be drafted with knowledge of what the other documents say. This requires the estate planning attorney and the business attorney to work together—or, ideally, for one firm to handle both.
Children In and Out of the Business
One of the most sensitive aspects of coordinating business succession with estate planning is treating children fairly when some are active in the business and others are not.
Leaving the business equally to all children—regardless of involvement—is a recipe for conflict. The child who has worked in the business for 15 years will resent sharing control with siblings who have never been involved. The uninvolved children will want distributions that the operating child believes should be reinvested. Stalemates, buyout demands, and lawsuits follow.
The better approach is using a combination of tools: leave the business (or voting interests) to the active child, equalize the other children’s inheritances through life insurance proceeds or other non-business assets, and use the trust to set clear expectations about distributions, buyouts, and transition timelines.
Spousal Rights and Prenuptial Agreements
Michigan law gives surviving spouses significant rights in a deceased spouse’s estate, including the right to elect against the will under MCL 700.2202. For a business owner, this means a surviving spouse could claim a share of the business interest—potentially disrupting the succession plan entirely.
Prenuptial and postnuptial agreements can address this by defining what happens to business interests in the event of death or divorce. For business owners who are already married, a postnuptial agreement combined with proper trust planning can protect the business without disinheriting the spouse. The key is addressing this proactively, not after a crisis forces the issue.
What Happens With and Without a Coordinated Plan: A Metro Detroit Example
Without coordination:
A Metro Detroit manufacturing company owner dies unexpectedly at 58. He has a will leaving everything equally to his three children and a basic LLC operating agreement with his business partner. The will triggers probate. Under MCL 700.3715(1)(z), the personal representative can only continue the business for four months without a court order—barely enough time to understand the company’s operations, let alone run them. The partner wants to buy out the deceased owner’s share but there is no buy-sell agreement setting a price. Two of the three children want to sell; one wants to keep the business. The partner and the children spend 18 months in litigation. Key employees leave. A major customer cancels its contract. By the time the dispute settles, the business has lost 40% of its value.
With coordination:
The same owner works with Boroja, Bernier & Associates to create a comprehensive, coordinated plan. His revocable trust owns his LLC interest. A funded buy-sell agreement establishes a fair market value formula and key-person insurance covers the buyout price. The operating agreement aligns with the trust provisions. Voting interests pass to his daughter who runs operations. Non-voting interests pass to his other two children, with distributions structured through the trust. Life insurance equalizes the non-business children’s inheritances. The partner completes the buyout within 60 days. The business never misses a beat. The family never sees a courtroom.
The difference is not luck. It is planning.
Frequently Asked Questions About Business Succession and Estate Planning in Michigan
Do I need both a business succession plan and an estate plan?
Yes—and they must be coordinated. A business succession plan governs how ownership and management transition during your lifetime or at death. An estate plan governs how all of your assets—including the business—are distributed. Without coordination, these documents can contradict each other, creating legal disputes and operational chaos that could have been prevented. Business succession documents are developed as a separate planning engagement from your personal estate plan, but the two must be built together.
Can I just leave my business to someone in my will?
You can, but it is one of the least effective approaches. A will goes through Michigan probate, which is public, time-consuming, and creates a gap in management authority. Under MCL 700.3715(1)(z), a personal representative can only continue your business for four months without a court order—and that personal representative may have no experience running the company. A revocable living trust avoids probate entirely and allows your successor to step in immediately.
How do I handle succession when some of my children work in the business and others don’t?
This is one of the most common challenges in business succession planning. The most effective approach is to leave business interests (particularly voting interests) to children who are active in the business, and equalize the inheritances of other children through life insurance, non-business assets, or structured trust distributions. Equal ownership among all children—regardless of involvement—frequently leads to family conflict.
What is a buy-sell agreement and why do I need one?
A buy-sell agreement is a binding contract that establishes what happens to an owner’s business interest when a triggering event occurs—death, disability, divorce, or retirement. It sets the purchase price or valuation method and identifies who buys the interest. Without one, surviving owners and heirs are left to negotiate under pressure, often resulting in litigation or forced sales at below-market prices.
Are business succession documents included in a standard estate plan?
No. Business succession planning—including buy-sell agreements, entity restructuring, and creation of voting and non-voting interests—is a separate engagement from a personal estate plan. The cost varies based on the complexity of the business structure, number of owners, and specific planning goals. However, the business succession documents and the estate plan must be developed in coordination with each other. At Boroja, Bernier & Associates, we structure the process so that both sets of documents work together seamlessly.
What happens to my business if I become incapacitated but don’t die?
Incapacity without a plan can be worse than death for a business. If you become unable to manage your affairs and have no trust or power of attorney in place, someone must petition the court for a conservatorship—a process that can take weeks or months. During that time, no one has authority to run the business. Under Michigan’s Uniform Power of Attorney Act (MCL 556.201 et seq.), a properly drafted durable power of attorney can designate someone to manage your financial and business affairs immediately, without court involvement. That power of attorney should explicitly authorize your agent to operate, manage, or sell the business.
How often should I review my coordinated business succession and estate plan?
Every two to three years, or immediately after any significant change. Changes in business value, ownership structure, family circumstances, key employee departures, or tax law all warrant a review. Buy-sell agreement valuations are particularly prone to becoming outdated—a price that was fair three years ago may dramatically understate or overstate the company’s current worth, creating problems for both the buying and selling sides.
Take the Next Step: Protect Your Business and Your Family
Your business is likely the most valuable asset your family has. It represents not just financial security but years of work, relationships, and decisions that cannot be replicated. Leaving its future to chance—or to a probate court—is a risk that no Michigan business owner should accept.
At Boroja, Bernier & Associates, we help Michigan business owners create coordinated plans that protect both their companies and their families. Our estate planning attorneys work with your business counsel to ensure that every document—your trust, your operating agreement, your buy-sell agreement, and your insurance funding—works together seamlessly. With offices in Shelby Township, Troy, Ann Arbor, and Lansing, we serve business owners throughout the state.
To schedule a consultation with the Michigan estate planning attorneys at Boroja, Bernier & Associates, call our law offices at (586) 991-7611. The best time to coordinate your business succession plan with your estate plan is before you need it. The second-best time is today.
