In a recent case, the Illinois Supreme Court reaffirmed the need for careful business and succession planning. A business owner who died had transferred his interest in the Family Owned Business to his son. In return the business owner was to receive lifetime payments in the form of a consulting fee for life and for lifetime consulting fee payments to his wife.
The terms of the business interest transfer agreement were binding on successors and assigns. Unfortunately, after the business owner died, the company stopped making fee payments to his wife. Unfortunately, the widow’s claims for breach of contract against the Business or Company failed as a matter of law. The Illinois Business Corporations Act does not provide survival of such claims and thus the widow’s claim was dismissed.
Unfortunately, the Business Owner’s wife was left out in the cold, but this situation could have been easily remedied by including a survival provision in the business interest transfer agreement. Careful business and succession planning is vital to ensure you and your loved ones are properly cared for after you are gone.
See: Pielet v. Pielet