What happens after the death of a partner in an S corporation? 1 Answers as of May 20, 2016

We own real estate and my husband is insisting we make s corporation but I don't know what will happen to the property in case of death of one spouse,does it still automatically go to the other partner. At this point it is in joint name and my understanding is it just goes to the other partner in case one dies.

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Ashcraft & Ashcraft, Ltd.
Ashcraft & Ashcraft, Ltd. | Randall C. Romei
Real Estate owned in joint tenancy by two individuals will be owned solely by the surviving joint tenant when the first joint tenant dies. Real Estate owned by an S Corporation will continue to be owned by the S Corporation when a shareholder dies. The heirs or legatees of the deceased shareholder will own the deceased shareholder interest. The Will or Trust of the deceased shareholder, if any, will control the identity of the successor owner. If there is no Will or Trust then the statute on descent and distribution controls and the spouse would receive a portion of the deceased shareholder estate and children, if any, would receive the remaining portion. If the shares are held jointly by two individuals then the surviving joint tenant would own the shares upon the death of the other joint tenant. There may be provisions in the Articles of Incorporation or a shareholder agreement that restricts the transfer of the shares in the S Corporation. There are many advantages to corporate ownership of Real Estate. You should meet with an attorney to discuss the rights, restrictions and obligations of a shareholder in the contemplated S Corporation.
Answer Applies to: Illinois
Replied: 5/20/2016
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