What is required to be done with shares if a shareholder dies or becomes incapable?

When a shareholder passes away or becomes incapable, the management of their shares is generally guided by specific legal and organizational protocols. In most cases, the shares must be transferred to another individual, typically an heir or beneficiary. This transfer is often required to be completed within a specified timeframe, which can vary based on corporate bylaws or state laws. The timeframe of six months or 90 days allows for the necessary administrative processes to occur, such as obtaining the proper legal documentation and ensuring that the estate’s wishes are honored. This timeframe is critical as it helps to prevent delays in the management of the corporation and assures all parties that the shares will be handled appropriately in accordance with law and corporate governance.

The other options do not align with standard practices. Selling the shares outright may not reflect the wishes of the deceased or incapable shareholder, nor does it acknowledge the rights of heirs. Allowing the shares to remain with the estate executor without action could lead to complications, while stating that no action is required would neglect the legal and operational implications of shareholder status.