Detailed Answer

When a loved one dies, you must identify which assets belong to the decedent’s estate and which are held by any corporation the family may have formed. In Kentucky, the distinction turns on title, governing documents and legal formalities.

1. Review Ownership and Title Documents

Assets owned solely in the decedent’s name pass through probate. Examples include bank accounts titled in the decedent’s individual name, real estate held in fee simple by the decedent, and personal property listed on a probate inventory. Under KRS 396.020, these assets form the “estate of the decedent” and are subject to administration: KRS 396.020.

By contrast, assets titled in a corporation’s name belong to that legal entity. You can verify corporate ownership by searching the Kentucky Secretary of State’s records (KY SOS Business Search). Look for:

• Articles of Incorporation naming the corporation.
• Corporate minutes or resolutions authorizing purchase of the asset.
• Deeds, certificates or account statements in the corporation’s name.

2. Examine Governing Documents and Formalities

A valid Kentucky corporation must observe formalities under the Kentucky Business Entity Act. Key statutes include the definition section (KRS 271B.1-010) and director/shareholder duties in KRS 271B.8-010.

If the relative failed to maintain separate records, mingled funds, or treated corporate assets as personal, a court may deem the corporation an “alter ego” and include corporate assets in the probate estate. Courts consider factors such as:

• Lack of separate bank accounts or accounting records.
• Failure to hold shareholder or director meetings.
• Use of corporate funds to pay personal expenses of the decedent or relatives.

3. Identify Transfer-on-Death and Beneficiary Designations

Certain assets bypass probate if a beneficiary designation exists. For example, life insurance and retirement accounts pass directly to named beneficiaries under KRS 304.17-530 and KRS 386.350. These are not estate assets even if titled in the decedent’s name. Corporate holdings do not use probate beneficiary designations and follow corporate bylaws or shareholder agreements instead.

4. Consider Professional Valuation and Legal Review

When in doubt, obtain a valuation and legal opinion. A forensic accountant can trace fund flows and distinguish personal from corporate expenditures. An attorney familiar with Kentucky probate and corporate law can review documents and advise whether corporate assets should remain outside the estate.

Helpful Hints

• Gather all deeds, account statements and titles in the decedent’s name before probate.
• Search the KY Secretary of State’s business database for corporate filings.
• Ask for corporate minutes or resolutions that authorize asset purchases.
• Keep corporate records and bank accounts strictly separate from personal finances.
• Check beneficiary designations on retirement plans and life insurance policies.
• Consult a probate attorney if corporate formalities were not observed.
• Obtain a professional asset appraisal to value both estate and corporate assets.
• Document any instances of fund commingling to support or defend a veil-piercing claim.