When partners live or operate in different states, succession planning is no longer a single-state issue. Utah law will govern many internal business matters, but other states may control probate, estate tax, property rights, and court procedures.

A well-structured succession plan for a Utah business with multi-state partners aligns:

• Utah business law
• The other partner’s home-state law
• Federal tax rules
• The company’s governing documents (LLC operating agreement, partnership agreement, or bylaws)

A coordinated legal plan keeps ownership stable and prevents disputes when a partner exits the business voluntarily or unexpectedly.

For multi-state partners, the first step is confirming the basic framework that controls how ownership transfers when something happens to a partner:

• Where the business is legally formed (Utah or another state).
• Whether the governing agreement clearly specifies a “choice of law.”
• Whether Utah or another state controls the operating rules during an ownership transition.

Why this matters: If your LLC is formed in Utah but a partner lives in Arizona, Arizona probate laws might still apply if that partner dies, meaning your Utah-based buy-sell provisions must sync with their state’s estate rules.

A buy-sell agreement is the backbone of multi-state succession planning. It sets out what happens when a partner retires, becomes disabled, is incapacitated, or dies.

At minimum, a cross-state buy-sell should address:

Utah’s probate rules may differ significantly from where another partner resides. Two common conflicts appear when a partner dies in another state:

• Utah is a Uniform Probate Code (UPC) state. Some partner states are not, which can create different requirements for notice, timelines, and asset transfers.
• Utah allows informal probate. Other states may require more formal, court-intensive processes.

If one partner dies in a non-UPC state, transferring their business interest may take longer unless documents are designed to avoid probate delays through trusts, transfer-on-death provisions, or properly structured buy-sell agreements.

Step 4: Evaluate Multi-State Estate and Tax Implications. Even if Utah does not have a state estate tax, a partner’s home state might. This can affect:

• Business valuation for estate and inheritance purposes.
• How ownership interests transfer to heirs or a trust.
• Whether life insurance or trusts should be added to fund the transition.

Thoughtful multi-state tax planning helps avoid surprise tax bills for surviving owners or a deceased partner’s family.

Step 5: Update Governing Documents to Reflect Cross-State Needs. Each of the following should be checked for consistency with the buy-sell agreement and the partners’ home-state laws:

• Operating agreement or partnership agreement
• Corporate bylaws (if a corporation)
• Member or shareholder agreements
• Durable powers of attorney
• Trusts holding ownership interests
• Business continuity or emergency management plans

A mismatch between state-specific estate documents and business agreements is one of the biggest causes of multi-state succession disputes.

Step 6: Add Dispute Prevention Tools. Multi-state ownership often leads to misunderstandings. Many Utah businesses reduce risk by building in:

• Clear valuation formulas that are easy to apply and hard to manipulate.
• Mandatory mediation or arbitration clauses before anyone heads to court.
• Disability and incapacity definitions that work under both Utah law and the partner’s home-state law.
• Rules for unanimous versus majority decisions during a transition period.
• Long-term transition timelines so owners, families, and lenders know what to expect.

Q: Does Utah law always control what happens when a partner exits?
A: Not always. Utah law generally controls internal business governance if the entity is formed in Utah, but a partner’s home state may control probate, tax treatment, or how their interest passes on death. Effective succession plans blend both sets of rules so there are no surprises.

Q: Can Utah businesses avoid out-of-state probate delays?
A: Often yes. Tools like well-drafted buy-sell agreements, revocable trusts, and transfer-on-death mechanisms can keep a partner’s interest from getting tied up in another state’s court system. The goal is to allow the business to move forward even while the partner’s personal estate is being handled elsewhere.

Q: Do partners need separate estate plans in their home states?
A: Yes. Every partner should have a home-state estate plan that is intentionally aligned with the Utah business’s succession documents. Wills, trusts, and powers of attorney should all match what the operating agreement or buy-sell says happens to their interest.

Q: Are LLCs better than corporations for multi-state succession?
A: LLCs often offer more flexibility for transfers, restrictions, and tax treatment, but either entity can work if the documents are drafted with multi-state transitions in mind. The key is customization, not the label.

Q: When should partners start planning?
A: Early. Transitions involving two or more states can take years to structure correctly. Waiting until a partner is already sick, burned out, or in conflict with other owners usually makes planning more expensive and less effective.