Business Succession Planning in West Hills

Business Succession Planning in West Hills

The general framework, including how a buy-sell overrides the estate plan and the authority gap probate creates, is on the business law page.

West Hills family businesses tend to have a specific shape: one business, one family, and children with very different levels of involvement in it. That is a fairness problem before it is a legal one.

The child who works there and the ones who do not

One child has worked in the business for fifteen years, often for less than they could earn elsewhere, and has built much of its current value. The others have careers of their own and expect an equal inheritance.

Leaving equal shares looks fair and satisfies nobody. The operator resents carrying siblings who take profits without working, and the siblings suspect the operator of paying themselves too much and running the company for their own benefit. Both suspicions are usually sincere and neither is easily disproved from outside.

The structures that work separate ownership from involvement. The operator takes the business, and the others are equalized with other assets or with life insurance bought for the purpose. Where the business is most of the estate, insurance is often the only thing that makes an equal outcome possible at all.

If the operator has to buy the others out

Where equalizing assets do not exist, the operator sometimes buys the siblings’ shares over time. That can work, and it fails in a predictable way: the payments depend on the business continuing to perform, the siblings become creditors of a company they do not control, and one bad year turns a family arrangement into a default.

If that is the plan, it needs real terms. Security, a defined price, a schedule, and what happens if payments stop. A handshake arrangement between siblings is the version that ends in litigation.

Arrangement	How it goes	Where it breaks
Equal shares	Looks fair.	Satisfies nobody. The operator resents carrying siblings, and the siblings suspect the operator.
Operator takes the business, others equalized	Equalized with other assets or life insurance bought for the purpose.	Where the business is most of the estate, insurance is often the only thing that makes it work.
Operator buys the siblings out over time	Can work if it has real terms: security, a defined price, a schedule, and what happens if payments stop.	Payments depend on the business performing, and the siblings become creditors of a company they don’t control.

Bringing the next generation in before you leave

The best succession plans in family businesses are gradual. Ownership transfers over years rather than at a death, the successor takes on real authority while the founder is still there to correct mistakes, and customers and employees get used to the change while it can still be managed.

That also means a founder has to actually let go of decisions, which is the part most find hardest. A plan that transfers shares on paper while the founder keeps making every call has not transferred the business, and the successor will not be ready when it matters.

When the house and the business interest are both in your name

Take a West Hills owner whose house is worth the typical $985,165 for ZIP 91307 (Zillow Home Value Index, August 2026) and who holds a business interest, say an LLC membership, worth $500,000 in their own name. Both are probate assets if nothing is in a trust. Here’s how the statutory schedule builds on the combined $1,485,165. The $500,000 is my assumption for the example.

Slice of the estate	Rate	Allowed to each
First $100,000	4%	$4,000
Next $100,000	3%	$3,000
Next $800,000	2%	$16,000
Remaining $485,165	1%	$4,852
Total, personal representative		$27,852
Total, attorney		$27,852

Prob. Code §§ 10800 and 10810 figure the fee on the value of the estate without reference to encumbrances or other obligations on estate property. The business interest alone adds about $5,150 to each fee, and the two fees together come to $55,703 on this estate. That’s what the schedule allows, and the appraised value of the interest drives it, not what the family thinks the business is worth. If a funded trust holds both the house and the interest, neither one sits in the probate inventory, so none of this schedule is figured on them.

The building the business operates from

If the family owns the shop, office or warehouse, Prop 19 doesn’t help. The Board of Equalization says Prop 19 limits the parent-child exclusion to a family home that becomes the transferee’s principal residence, or a family farm. A commercial building passed to the child who runs the company is reassessed at market value. The property tax bill goes up while the business is absorbing the founder’s absence.

That belongs in the equalizing conversation above. A building with a large assessed-value gap is a liability as well as an asset, and the child who takes it inherits the higher tax. Where an entity holds the building, the ownership chart decides what counts as a transfer, so I review it before any plan is signed. See business law and business continuity for the entity side.

Where the paperwork lands for a West Hills owner

West Hills is in the City of Los Angeles, and Los Angeles Superior Court Local Rule 4.3(a) sends every probate matter outside the North District to the Central District at the Stanley Mosk Courthouse. Deeds are recorded with the Los Angeles County Registrar-Recorder in Norwalk. Bring the entity documents, the deeds to any real property the business uses, and the lease if the family rents the space. The first thing I check is which of them sits in whose name. If a successor sells the building instead of keeping it, the City’s Measure ULA tax applies only to conveyances above $5,400,000 for closings after June 30, 2026. A sale below that line still owes the City’s base transfer tax of $2.25 per $500 or part thereof, and no ULA tax.

Questions West Hills clients ask

One of my children runs the business. How do I treat them all fairly?

By separating ownership from involvement. The operator takes the business and the others are equalized with other assets or with life insurance bought for that purpose. Equal shares with unequal involvement is the arrangement that most reliably ends in conflict.

There are no other assets to equalize with. What then?

Life insurance is usually the answer, because it creates a pool that did not exist. The alternative is the operator buying the others out over time, which needs real terms rather than a family understanding.

Is a buyout by the operator workable?

It can be, but it makes your other children creditors of a business they do not control. It needs security, a defined price, a schedule and a written answer to what happens if payments stop.

When should I start transferring?

Earlier than most founders want to. Gradual transfer lets the successor take real authority while you are still there to correct mistakes, and lets customers and employees adjust. Transferring shares while still making every decision has not transferred anything.

What does this cost?

Entity formation is flat-fee: $2,500 single-owner, $5,500 multi-owner, $4,500 for a professional corporation. Contract review, standalone buy-sells and ongoing advisory are $500 per hour.

Does Prop 19 protect a commercial building I leave to my son?

No. The Board of Equalization describes the exclusion as covering a family home that becomes the child’s principal residence or a family farm. A commercial building isn’t either one, so it’s reassessed when it passes.

If my LLC interest is in my own name, does it go through probate?

Yes, unless a trust holds it or a valid transfer-on-death arrangement applies. The value counts in the estate that the probate fee schedule is figured on. Holding the interest in a living trust keeps it out of that count and lets the successor act without waiting for a court appointment.

Where is a West Hills business owner’s probate filed?

At the Stanley Mosk Courthouse, 111 N. Hill St. in Los Angeles. Local Rule 4.3(a) files all probate matters there except in the North District. A representative appointed there then acts for the business.