Our company has been la s-corp since march 11 2004. I have worked for the company since, my father is the 100% owner. He wants to give me and my brother shares of the company, but he is under the impression that his wife will have to sign the stock certificates also is this true? He was married to her in June of 2005 so it was after the company established.
1 Answer from Attorneys
THE LAW OFFICES OF
DONALD W. HUDSPETH, P.C.
A PROFESSIONAL CORPORATION
“The Business of our Firm is Business”
Well, there are several considerations here. If your father is the 100% owner, and there are no restrictions on him signing the stock over to you, then he can do it. However, his wife may have community property rights expectations, which may cause complications. And, there may be restrictions set up in the bylaws or on the certificates which require more than just his signature. He's the 100% owner, but is she an officer required to sign? To prevent any problems arising from this transfer, he should, in addition, contact an attorney to have a will drafted setting forth his wishes after he passes. Sorry to have to address this topic, but better now. He should have a will drafted anyway, because without a will, people may fight, and the expensive probate court process will decide who should get what after he passes. He should also hold a corporate meeting, with all present, and record minutes, either on video or paper, to document the share transfer. If his reluctance arises from his concern about her expectations of inheriting a certain percentage of the company, then having the corporate meeting will also satisfy a need for all of you to sit down and have a long talk with everybody about what his wishes are and what concerns everyone else has. If one or more of you want control of the corporation after his passing and the others want to be bought out, you might consider insuring the shareholders' lives so that one or more of the surviving shareholders are bought out with the proceeds of the life insurance. Contact an insurance salesman to do this. Without knowing more information, I can't advise you further, but get thee to an attorney to avoid future complications arising from this.
Please feel free to contact us if you have any questions.
Thomas J. Gadd,
Paralegal to The Firm
Law Offices of Donald W. Hudspeth, P.C.
3030 N. Central Avenue, Suite 604
Phoenix, AZ 85012
tele. 602.265.7997, ext. 106
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