Can You Leave a Sole Proprietorship in a Will?
A sole proprietorship offers you ease of start-up. You don't have to file complicated papers with your state, and you don't have to conduct meetings of officers. However, a sole proprietorship presents some complications when it comes to leaving the company to your heirs. You can't technically leave a sole proprietorship to your heirs when you die. However, with some forethought and communication with those you want to leave the business to, you can find a way to pass your company assets on to them.
The law says a sole proprietorship does not survive you. This means the company cannot keep operating under its original name, and the company cannot be inherited. For example, a company called Flowers by Delores that is a sole proprietorship is considered defunct upon the sole proprietor's death. No contracts, accounts or agreements remain in effect after the death of the owner.
Just because you can't pass along a company that is a sole proprietorship, that doesn't mean you can't pass along the assets. Your company assets are part of your personal estate, and you can leave your estate to whomever you want. Designate specific assets in your will, and you can legally leave them to someone else. The people inheriting can't use those assets to operate your old company, but they are free to form a new company and use those assets. For example, if Joe's Printing is a sole proprietorship, Joe can leave his printing presses to his son Bob, who is free to open Bob's Printing.
You should not assume that your spouse will gain control of your business bank account, even if you make that spouse an authorized signer. Upon your death, the bank will not assume you wanted your spouse to receive the money in the account. You must specifically state in your will who receives the funds in your sole proprietor bank account.
If you want to make sure your heir receives your business assets, you can sell those assets to that person before your death. You can continue operating the business, but your heir will actually own the company property, equipment and vehicles. If you sell in advance, you do not have to list these assets in your will.