By Tim Barkley. June 2020.
“My husband just died, and I’m trying to figure out what to do with his business. I don’t even have the code to the security system. His business records are all online or in his computer, and I don’t have the password. Can you help?”
Of course. Glad to do so.
Online public records can be a starting place. If the deceased owned real estate, in his name or in the name of the business, those records are online. In a recent case, we knew about a line of credit, because the bank sent bills. What we didn’t know until we looked at the online land records was that the line of credit was actually the purchase money for the office suite. The estate went from “seriously underwater” to “seriously solvent” almost instantaneously.
If the business is incorporated or organized as an LLC, those filings are online. If a professional prepared the documents for the formation of the business, they might have other records or helpful information. If an annual report and personal property return was filed with the Maryland assessments office, it might have been prepared by the business accountant, who might have information on banking and retirement assets.
If the deceased was the only owner of the business, then the surviving family will have to open an estate and obtain “letters of administration” from the Register of Wills in order to sign the necessary releases and authorizations to get access to the confidential business records. Banks and brokerages, and accountants and attorneys, have strict confidentiality requirements that they must meet, and these will dictate what the survivors must do to be authorized to receive information. Sometimes a subpoena from the Orphan’s Court is even required.
Computer records can sometimes be retrieved by an “ethical hacker.” These folks specialize in legal access to encrypted and password-protected computer files. Access is not always possible, depending on levels of encryption, but even partial access can provide helpful direction.
Creditors will helpfully send billing statements, and if they are billing online and don’t get paid, eventually they will send physical mail. Forwarding the business and personal mail of the deceased is imperative. Often an unpaid creditor who is informed of the death of the debtor will waive late fees and penalties.
The unclaimed property office of the Maryland Comptroller will often hold assets of the deceased. Those records are publicly searchable. Private investigators and others can also do online asset searches and “skip trace” individuals.
A better answer is to avoid this scenario in the first place. A power of attorney that grants authority over business assets can help during a period of illness or incompetency. Registering stock or LLC membership interests as “transferrable on death” to family members can make it easier for the survivors, as the new owners of the business, to access business assets without involving the courts.
Busy businessowners often feel they cannot dedicate time to maintaining orderly records. Mea culpa. But an occasional discussion with family members and a list of important passwords and contacts is invaluable at a time of crisis.
Professional corporations and LLCs are often bound by ethical or regulatory requirements that limit the activities of surviving family members. For example, a psychologist client of this firm has created a “professional will” in addition to her “regular will,” to direct the disposition of patient files and ongoing matters. Medical records of a doctor or dentist must be transferred to the patient or to another professional.
A deceased attorney’s ongoing matters must be handled by another attorney, and the legal practice can only be owned by an attorney. Careful planning is required. There are personal as well as liability issues that dictate prompt transfer of files and ongoing provision of professional services. Succession planning is imperative.
Plan ahead, so that giving them the business isn’t “giving them the business.”
Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
Wills & Trusts | Estate Planning | Probates & Estates
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