My Mom Inherited My Dad’s Business, But His Business Partner Refuses To Pay Her

Location: Louisiana, United States

I have kept some details vague to remain anonymous.

My dad started a small but relatively lucrative company in the early 1990s in a very niche industry. At its peak, the company made about $10 million dollars in profits a year. My dad owned 42% of the shares and his business partner, “Stanley,” owned another 42%. Two other minority partners own the rest of the shares between them.

When my dad passed away five years ago, he left everything to my mom. This means that my mom now owns 42% of the company. The company continues to operate with a small number of employees (around 10), with Stanley and one of the minority partners running most of the day to day operations. As far as I understand, the company is still profitable.

Though my dad had a will and had all his papers in order, he did not put in writing what to do with the company should something happen to him. I’m not sure why he didn’t think to plan for this. He had been sick a few years before he passed, and I think he ultimately believed he would make a full recovery.

So, after he died my mom has had to deal with increasingly hostile behavior from Stanley, my dad’s business partner. My dad and Stanley had an interesting dynamic that worked well for the company. My dad was a people person, and acted as the face of the company. Stanley is not as good with people, but knew the industry even better than my dad, and is known for doing excellent work. Stanley could be gruff, but the two worked well together.

But we could not have anticipated how utterly callous he has become since my dad passed.

For example, not a month after my dad’s funeral, Stanley stopped paying for my mom’s healthcare plan that she received through the company. She was fortunately able to get on Medicare, but Stanley and all of the other employees continued to receive healthcare benefits. When my mom confronted him about it, he told her that he and my dad had made an agreement that “the wives wouldn’t be involved in the business if something happened” to him or my dad—which (a) is a strange if not cruel logic to make that decision and (b) we all knew this was not true, my dad would never have said that. My dad had a reputation for being generous to a fault. He took care of his employees, and many of the people at his company had worked for him for over two decades.

It didn’t seem like much could be done to fight Stanley on the healthcare plan, and since my mom had Medicare, we let it go.

And then a few months ago, Stanley suddenly took away my mom’s salary, all the while continuing to pay himself a salary and pay dividends to the other two shareholders. My mom has met with him a few times to discuss this, but Stanley has refused to pay her anything more, since according to him she doesn’t do any work for the company and does not contribute in any way that he feels is meaningful.

So my question is, does Stanley have the right to withhold earnings from other shareholders? My mom has been resigned that nothing could be done, but this feels very wrong. This is a very small company. There is no HR, so it’s not like she can go make a report. Moreover, she is a majority owner of the company, not an employee. I would imagine that she has certain rights to compensation, but I don’t know or understand how that works.

My mom is a powerhouse and can be very shrewd, but I think Stanley has really exhausted her. I would really appreciate some advice on how she could legally advocate for herself.