What Happens to Business Contracts When the Owner Dies in Georgia
When a Georgia business owner dies, business contracts do not automatically transfer to heirs or keep performing on their own. Many contracts include change-of-control clauses that allow the other party to terminate immediately. This article explains which contracts survive death, which terminate, and what you need in place before you die to prevent a contract crisis.
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Melissa Breyer
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Melissa Breyer is a Georgia estate planning attorney who works exclusively on trust-based estate planning and LLC formation. She personally designs every plan at The Hive Law and handles every client consultation herself. Every plan is built from scratch for your specific family, your specific assets, and your specific wishes.
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Frequently Asked Questions
Most business contracts survive death and become assets and obligations of the estate. They pass to the personal representative during probate — not directly to heirs. The personal representative has authority to enforce and perform on those contracts during the probate process.
Heirs do not inherit contract rights directly until the estate is administered and distributed. If probate takes 9 to 18 months, that is how long contracts sit under the personal representative’s management rather than under active ownership. A revocable living trust bypasses this entirely — the successor trustee takes authority immediately at death with no probate gap.
Only if the contract includes a termination or change-of-control clause tied to the owner’s death or a transfer of ownership. Without such a clause, a vendor cannot terminate a valid contract simply because the owner died — the contract survives and remains binding on both parties.
The practical risk is different: vendors who cannot reach a decision-maker during the probate gap may stop fulfilling orders, even if they technically cannot terminate the contract. By the time the personal representative is appointed and has authority to act, vendor relationships may have broken down in practice even if they remain intact on paper.
The lease obligation passes to the estate. The personal representative is responsible for paying rent. Landlords can pursue breach of contract claims and eventually eviction if rent stops — and the probate process does not excuse the obligation to pay.
Most commercial leases also include change-of-control provisions that require the landlord’s consent before the business ownership can transfer. A trust transfer that moves the LLC interest to a successor trustee may trigger these provisions. Review your lease’s assignment and change-of-control clauses before finalizing your succession plan — and if landlord consent is required, address it while you are alive.
Customer contracts survive death and remain obligations of the estate. If the business was in the middle of a project or service engagement, the personal representative must either complete it or negotiate a resolution. Failure to perform triggers breach of contract claims — customers become creditors of the estate and file claims during the 4-month creditor window.
For businesses with recurring revenue — subscription services, maintenance contracts, retainer agreements — the probate gap is especially damaging. Customers who cannot reach anyone with authority cancel. Revenue disappears while the estate’s legal obligation to deliver remains.
Non-compete agreements bind the person, not the estate. Death terminates the owner’s personal non-compete obligations. A former employer or business buyer cannot enforce a non-compete against a deceased person’s estate.
The exception: non-compete agreements that were structured as business obligations — protecting the buyer of a business, for example — may survive death if they run with the business rather than the individual. Review the specific language in any non-compete agreement to determine whether it is personal or a business-level obligation. Personal non-competes end at death. Business non-competes survive.
A trust-held LLC interest transfers to the successor trustee immediately at death — no probate, no court appointment, no authority gap. The successor trustee has full management authority on day one under the trust document and the updated LLC operating agreement.
This matters for contracts in two ways: (1) No performance gap. The successor can sign checks, place orders, fulfill service obligations, and renew leases from day one. No breach claims accumulate during a probate wait. (2) Change-of-control clauses may not trigger. If the trust was in place before the owner’s death and the LLC operating agreement authorizes trust ownership, the transfer may not constitute a “change of control” under many contract definitions — because the trust was already the member. Review your key contracts with an attorney before finalizing this structure.
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