Cash or In-Kind? Distributing Shares of a Florida Business After the Owner’s Death

A key consideration in succession planning is how to distribute any shares or ownership interests you have in a Florida business. If your will simply divides your estate into percentage shares, that can leave your personal representative with a decision to make: Do I distribute those shares in-kind to the beneficiaries, or do I liquidate the assets and distribute cash instead? The Tampa business succession planning attorneys at Bleakley Bavol Denman & Grace can review your situation and advise you of your options.

Florida Appeals Court Reverses Order Overruling Executor

In many cases, individuals give their personal representative broad discretion to choose either a cash or in-kind distribution of business assets. Ideally, this can prevent unnecessary estate administration expenses. Unfortunately, it can also prompt litigation if the beneficiaries disagree with the personal representative’s decision.

A recent decision from the Florida Third District Court of Appeals, Hinson v. Hinson, provides a case in point. This case involved the estate of John A. Hinson, who died in 2021. His will named three beneficiaries: his wife, who was also named personal representative of his estate; his secretary, Monica Pelella; and a personal friend, James Baker. Under the terms of the will, the wife received 95 percent of the residuary estate, with Pelella receiving 3 percent and Baker 2 percent.

The probate estate’s assets included Hinson’s limited partnership interest in a Georgia limited liability partnership (LLP) as well as stock in six closely held Florida corporations. Hinson’s widow, acting as personal representative, decided to distribute these interests in-kind to the other beneficiaries of the estate. In other words, Pelella and Baker each received 3 percent and 2 percent, respectively, of the estate’s interest in the LLP and the Florida corporations.

Pelella and Baker objected to this decision, however, and asked the probate court to order the estate to liquidate the business interests and make the distributions in cash instead. The probate court granted the request. In particular, the judge expressed concern that Pelella, an elderly woman who was not business savvy, would be unfairly burdened by having to assume ownership responsibility for the various business interests.

The estate appealed. The Third District ultimately reversed the probate court’s decision, holding that both the terms of the will and the Florida Probate Court properly vested the decision on whether to make a cash or in-kind distribution with the personal representative. The appellate court explained that under the Probate Code, “[a]ssets shall be distributed in-kind” unless the will directs otherwise or contains a general power of sale. Here, the will did contain such a general power, but the Third District said that simply gave the personal representative the option of making a cash distribution. Ultimately, the will granted Hinson’s wife broad discretion to decide how to distribute the estate’s assets to the named beneficiaries.

Contact a Tampa Estate Litigation Attorney Today

Good faith disagreements can and do arise over how to properly administer a Florida probate estate. If you are involved with such a dispute and need legal representation from a qualified Tampa estate litigation attorney, contact Bleakley Bavol Denman & Grace today to schedule a consultation.

Source:

https://scholar.google.com/scholar_case?case=4123051577953166823