Why a sole owner without a succession plan can leave the family stuck in probate, and how a trust keeps it running

By Austin Holmes, Co-Founder & President, Publicity For Good & Signal Raptor / Host of OverPressure Podcast

Focus Insights

  • Estate planning for business owners starts with one blunt question about what would happen to everything if you died today.
  • A business owned by one person, with no succession plan in its operating agreement, can stall in probate.
  • A revocable trust can be updated with a phone call, and many people never do.

Matthew Meredith opens almost every client meeting the same way. He asks what happens to everything if you die today, and for many people it’s the first time they’ve talked it through. Matthew is an estate planning, tax and business attorney in Houston who also manages money. After years as a trader and financial advisor, he went to law school because he kept watching a client’s CPA, attorney and advisor work in separate silos.

Our own first step was putting our LLCs under an S corp and writing a real operating agreement, and the business is still the hard part because it doesn’t run on its own yet.

Start With an Inventory

Matthew’s first step is simple and a little uncomfortable. List everything you own, every person you’d want to receive something, and who should take control if something happens to you, whether you die or you’re alive and unable to act.

He considers incapacity an even bigger risk than death. A bad car accident can leave a spouse unable to reach the business accounts or keep vendor relationships alive, and by the time the owner recovers, a lot of what they built can be gone. His three goals for any plan are protecting the family, avoiding probate and keeping control over what happens.

He estimates that cleaning up after someone who skipped planning typically runs $6,000 to $12,000, and more when the situation is complicated.

What Happens to the Business When the Owner Dies

If you’re the sole owner and your operating agreement has no succession plan, Matthew says the business usually has to go through probate. Nobody has authority to move money or sign deals until a court grants it, and he warns that a business can sell for around 30 cents on the dollar a year later because the spouse couldn’t get access in time.

His fix is to trust the owner. A common setup he uses is a holding company, often in Wyoming for privacy, owned by the person’s revocable trust, with operating companies underneath in the states where they actually do business. If the owner dies, the spouse steps in as successor trustee and keeps things running. Well-built companies also name emergency managers, he said.

An owner in survival mode should put money into operations first. Once the business has real value, it’s time to protect it, and anyone who already has a trust can name it as the owner of each new company from day one and skip refiling later.

Revocable and Irrevocable Trusts in Plain English

A revocable trust works like an extension of you. You can change it, cancel it and act as the person in charge, and most of them become irrevocable once the creators pass away. He estimates about 90% of people are best served by this setup.

An irrevocable trust gives stronger protection because you give up ownership and control of what goes into it. Matthew uses them for estate tax planning, for keeping large life insurance payouts out of the estate, and for children who may need guardrails because of age, addiction or a divorce. Creditors can reach money once it’s paid out to a beneficiary, so the trust can hold off on payments while a problem gets settled.

Plan Around How Your Family Actually Works

Some of the worst breakdowns Matthew sees come from emotional decisions. He described a mother who named her two children co-trustees even though they had never gotten along, hoping it would bring them closer. Three years later nothing had moved and lawsuits were starting. I saw a softer version on both sides of my family, and the tension between my parents and their siblings lingers 20 years later.

He also tells clients to write real needs into the trust. If a child has medical or mental health issues, the document should say money will be available for care, so a trustee can’t refuse it later. Matthew has done volunteer probate work for military families, and the same need comes up when parents leave money to a veteran son or daughter who may be struggling.

Estate Planning Basics for Business Owners

  • Every family needs a plan to avoid probate, and whether it includes a trust depends on the situation.
  • Naming a trust as the member of an LLC lets a successor trustee keep the business operating after the owner’s death.
  • Wyoming is a common choice for holding companies because of its privacy rules, and the operating company usually belongs in the state where the work happens.
  • A revocable trust can be amended at any time, which makes regular updates simple.

These are general points from our conversation, and an attorney and CPA licensed in your state should look at your specific situation.

Have the Morbid Conversation

Matthew is candid that he went years without his own will or trust and joked to his wife that he’d be the most embarrassed estate planning attorney ever to die. He describes his work as planning what happens for the family after a death, so he pushes people to talk. My takeaway is to sit down with your spouse this month and write out where everything is and who should run what. Bring those notes to a professional, since a trustee can only follow wishes you’ve actually put into words.

The full conversation with Matthew Meredith is on the OverPressure Podcast, available on YouTube and Spotify.

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About the Author
Austin Holmes is a Navy Special Operations veteran, father, and entrepreneur. He is the co-founder and President of Publicity For Good and CEO of Signal Raptor, a SaaS-enabled PR platform that modernizes one of the most traditional industries by productizing services and pairing technology with human expertise. He hosts the OverPressure Podcast, where he interviews veteran entrepreneurs about building businesses under real-world pressure.

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