If you own a business, you have signed a lot of paper. A lease. Vendor accounts. Promises to customers. It is normal to wonder what happens to all of it if you die, and whether your family gets left to sort it out. Not knowing the answer does not mean you did something wrong. Nobody explains this when you sign a lease. Most of what can go wrong here can be fixed while you are alive.
Do Business Contracts Survive When the Owner Dies
In most cases, a business contract survives the owner’s death. A contract is a promise between two sides, and a death alone does not erase it. What matters first is who signed it: your company, or you.
Contracts Your LLC Signed
An LLC is its own legal entity, separate from the owner. When your LLC signs a lease or a vendor agreement, the LLC is the one bound by it. Your death does not change who the contract is with. What you leave behind is your share of the LLC, not the LLC’s contracts.
So the contract is still in force. The open question is who can act on it. If your LLC has other owners or a manager, they keep running the company. But you may be the only owner and the only manager. Then there may be no one who can sign for the company. That lasts until a probate court appoints your executor.
Georgia has a default rule for that case. It is in O.C.G.A. § 14-11-506. The executor of the LLC’s last owner becomes a member. The executor can opt out in writing within 90 days. Your operating agreement can set a different rule. A second rule, O.C.G.A. § 14-11-602, covers what happens next. If the executor opts out and the LLC’s papers say nothing, the LLC can end 90 days after your death. What Happens to a Georgia LLC When the Owner Dies goes deeper on the company itself.
Contracts You Signed in Your Own Name
A sole proprietorship has no legal life apart from its owner. If the business is in your own name, every business contract is your own contract. When you die, the contracts that do not end become part of your estate. What Happens to a Georgia Sole Proprietorship When the Owner Dies explains what your family is left with.
An estate cannot act on its own. A probate court has to put someone in charge first. Georgia law does not automatically let an executor keep running a business. A will can give the executor that power. Without it, the family usually has to agree, or the probate court has to approve it.
A power of attorney does not fill the gap. Under O.C.G.A. § 10-6B-10, a power of attorney ends when the person who signed it dies. The person you trusted to sign for you loses that power when you die.
Contracts are one part of a bigger picture. For the rest, see What Happens to a Georgia Business When the Owner Dies Without a Succession Plan.
Which Contracts Terminate Automatically at Death
Only a few kinds of contracts end on their own when an owner dies. Most others keep going, unless the other side has a right to end them.
- Contracts for personal work. A contract that depends on one person’s own skill or labor usually ends when that person dies. No one else can do the work the contract was written around.
- Contracts that say so. Some agreements state that they end if the owner dies. The contract’s own wording controls.
- Powers you gave someone to act for you. Under O.C.G.A. § 10-6-33, the death of the person who gave the power ends it in most cases. This covers an employee or helper who signs for a business that is in your own name.
Georgia courts read the contract first. In a 1995 case, Citizens & Southern Trust Co. v. Hicks, an owner hired a manager for his real estate holdings under a three-year contract. The contract said that if the owner died and his representative let the manager go, the severance pay would come from the owner’s estate. The owner died three months in. The Georgia Court of Appeals upheld the manager’s award against the estate.
In the Hicks case, the Georgia Court of Appeals also repeated an older Georgia rule. A contract to work for a business in one owner’s name is treated as ending at the death of either side. That rule applies only when the contract says nothing different.
Clauses that let the other side walk away are a separate matter. A lease or supply contract may say that a sale, a transfer, or a “change of control” lets the other side end the deal. It may say the other side has to consent first. Under most of these clauses the contract does not end on its own. The other side gets a choice. Whether a death counts depends on how the contract defines the term.
One kind of contract is written for a death. A buy-sell agreement is a contract between the owners of a business. It says who buys an owner’s share, and how the price is set, when that owner dies or leaves. It is built to take effect at an owner’s death, not to end at it. If you have co-owners, What Is a Buy-Sell Agreement in Georgia? explains how one works.
Debts do not end either. Money you or your business owed before your death is still owed after it. What Happens to Business Debt When the Owner Dies in Georgia explains who pays, including debts you personally guaranteed.
Commercial Leases and What Happens to Your Space
A lease is a contract, so start with the same question. Who is the tenant on the lease: your LLC, or you?
If your LLC is the tenant, the LLC is still the tenant after you die. The rent is still due each month. The landlord is still bound too. If you are the only owner and manager, there may be no one with the power to pay the rent or talk to the landlord until the court appoints your executor.
If the lease is in your own name, it depends on what the lease says. In most cases, a lease for a set term does not end just because the tenant dies. If the lease stays in force, the rent that comes due becomes a matter for your estate. Probate does not pause it.
Georgia law adds a limit. Under O.C.G.A. § 44-7-1, a lease for less than five years gives the tenant only the right to use the space, unless the lease says otherwise. That right cannot be passed to someone else without the landlord’s consent. So your family may need the landlord to agree before the lease can go to the person who takes over.
Many commercial leases also have their own clauses about a transfer. Look for these in your lease:
- Assignment. Whether the lease can be handed to a new tenant, and whether the landlord has to consent.
- Change of ownership. Whether a change in who owns your company counts as a transfer.
- Death or default. Whether the tenant’s death gives the landlord a right to end the lease.
- Renewal dates. When an option to renew has to be used, and who is allowed to use it.
- Personal guarantee. Whether you promised to pay the rent yourself if the business does not.
Moving your LLC into a trust is a change on paper. Some leases treat that as a transfer. Ask for the landlord’s written consent while you are alive. You know the landlord, and you can sign what is needed. Your family would have to ask without you.
Vendor and Supplier Contracts During Probate
A vendor contract does not end just because the owner died, unless the contract says it does. The trouble during probate is more basic. Someone has to have the power to place orders, approve invoices, and pay the bills.
If your LLC has other owners or a manager, that power stays with them. O.C.G.A. § 14-11-301 covers this. A member who signs for the LLC in its usual business binds the LLC. In an LLC run by managers, the managers have that power instead. The power comes from the company, not from you.
If the business is in your own name, the power to act came from you. An office manager who signs purchase orders for you is acting as your agent. That power ends at your death in most cases. So does a power of attorney.
After that, a probate court has to put someone in charge. A temporary administrator can carry out your existing contracts and keep the business going under O.C.G.A. § 53-7-4. A probate court order has to come first. So does notice to everyone with a stake in the estate. What Is a Temporary Administrator in Georgia Probate explains that role.
Probate with a business in the estate is slower and costs more. Three things matter to your vendors and your family:
- Cost. In the cases we’ve handled, probate for an estate with a business in it has cost about $29,700.
- Time. In the cases we’ve handled, probate for an estate with a business in it has taken about 25 months.
- Control. Until the court puts someone in charge, no one may be able to sign for a business in your own name. That includes new orders and renewals.
Vendors need to reach someone who can approve an order or a payment. When they cannot, they may slow down or stop shipping. That can happen while the contract is still in force. The contract can survive on paper while the relationship breaks down. What Happens to a Georgia Business During Probate covers what the court controls during that time.
Your employees are in the same spot. They need someone with the power to run payroll. What Happens to Employees When a Georgia Business Owner Dies Without a Succession Plan covers pay, benefits, and who is in charge of the staff.
Customer Contracts and Service Agreements
Customers want to know one thing after an owner dies. Will the work still get done?
If the customer’s contract is with your LLC, the LLC still owes the work. A job in progress, a service plan, or a yearly maintenance contract all stay in place. If no one can run the jobs, the LLC can fall behind on its promises. A customer may then have a claim against the company.
If the contract is with you, it depends on the kind of work. Work that only you could do usually ends with you. A promise that someone else could carry out, like delivering goods already paid for, usually becomes a matter for your estate. A customer who paid for work that was never done may have a claim against the estate.
Georgia sets a clock for those claims. The executor has to publish a notice to creditors. Under O.C.G.A. § 53-7-41, creditors have three months after the last notice to come forward. A creditor who misses that date can lose the right to share equally with creditors who were paid first.
Money that customers owe you does not go away. If the business is an LLC, the money is owed to the LLC. If the business is in your name, it is owed to your estate. Either way, someone needs the power to send the invoice and collect it.
A will can help here. O.C.G.A. § 53-12-261 lists powers that a will can give an executor. They include the power to keep a business going and to make and change contracts. With those powers, your executor can finish jobs or settle up with customers without a court order each time. The court still has to appoint the executor first.
Customers on monthly or yearly service plans may cancel when they cannot reach anyone in charge. A plan that names who takes over keeps that from being a guess.
How to Protect Your Business Contracts Before You Die
No single document does this. The goal is for the right party to be on each contract, and for someone to have the power to step in. Each of these has to be done while you are alive and able to sign.
- Sign contracts in your company’s name. If the business is still in your own name, forming an LLC gives your contracts a party that does not die with you. New contracts go in the LLC’s name. Old ones may need the other side’s consent to move over.
- Say who takes over in your operating agreement. Georgia’s default rules give way to a written operating agreement. Yours can name who becomes the owner or manager after you, and who can sign. How to Update Your LLC Operating Agreement for Succession in Georgia lists what to add.
- Move your share of the LLC into a revocable living trust. Your trust names the person who takes over. Once that person accepts the job, they can act for the trust without waiting for a probate court to appoint them. The trust only covers what you actually move into it. How to Transfer an LLC Into a Trust in Georgia shows how the transfer works.
- Make the two documents match. Under Georgia’s default rules, a person who receives a share of an LLC gets its profits. That alone does not give them a say in running it. For your successor trustee to run the company, the operating agreement should say so. Without that, the other owners would all have to agree.
- Read your lease and key contracts. Look for clauses about death, assignment, and a change in ownership. If a move into your trust needs consent, ask for it in writing now.
- Give your executor business powers in your will. A contract left outside the trust may still go through probate. A will that grants the powers in O.C.G.A. § 53-12-261 lets your executor deal with those contracts.
- Keep a contract list. Write down each lease, vendor, and customer contract, when it renews, and who to call. Add the business’s bank accounts, insurance policies, and the online accounts it runs on, like its website and payment system. Tell the person who takes over where the list is.
Best Succession Planning Strategy for a Georgia LLC shows how these pieces fit together in three cases. One is a single owner. One is partners. One is an LLC run by a manager.
At The Hive Law, Georgia business succession planning covers the trust, the move of your LLC into it, and the operating agreement update. All of it is flat-fee pricing. How Much Does Business Succession Planning Cost in Georgia shows what each piece costs.
