Legal Glossary

Estate Planning

Federal Estate Tax Exemption

The total value of assets you can transfer at death without federal estate tax. As of 2026, the exemption is $15 million per individual.

Intestate Succession (NCGS Chapter 29)

How North Carolina distributes your assets if you die without a valid will. The state decides who inherits and in what order.

Probate (North Carolina)

The court-supervised process of validating a will, settling debts, and distributing assets after death. Governed by NCGS Chapter 28A.

Revocable vs. Irrevocable Trust

A revocable trust can be changed or cancelled during your lifetime. An irrevocable trust generally cannot. Both are governed by NCGS Chapter 36C.

Estate Planning by Age

Fiduciary

A fiduciary is a person or institution that holds legal authority to act on behalf of another party and is bound by law to act in that party's best interest. In estate planning, common fiduciaries include executors, trustees, agents under a power of attorney, and court-appointed guardians.

A common misconception is that any financial advisor or family helper qualifies as a fiduciary, but the role is defined by legal duty and accountability rather than relationship or job title.

Executor vs. Trustee

An executor is the person or institution named in a will to administer a deceased person's probate estate, and a trustee is the person or institution that manages assets held in a trust. Both are fiduciaries, but they operate under different legal frameworks and answer to different authorities.

In North Carolina, the umbrella term personal representative covers both executors (named in a will) and administrators (appointed when there is no will). Personal representatives are appointed and supervised by the Clerk of Superior Court, while trustees act under the terms of a written trust agreement and are not subject to ongoing court supervision in most cases.

A common point of confusion is that one person often serves in both roles when an estate plan combines a will and a revocable living trust, but the duties are still legally distinct.

Business Succession Planning

Cross Purchase Agreement

A cross-purchase agreement is a type of buy-sell agreement in which each co-owner of a business agrees to purchase the ownership interest of a departing, deceased, or disabled co-owner directly from that owner or their estate, rather than having the business entity itself make the purchase.

Intestacy

Intestacy is the legal condition of dying without a valid will, which causes a person's estate, including any business interests, to be distributed according to the state's default inheritance rules rather than the decedent's wishes.

Charging Order

A charging order is a court-issued remedy that allows a creditor of an individual LLC member to intercept distributions the LLC makes to that member, without giving the creditor direct ownership of the membership interest or the right to participate in management.

Selling a Business to Private Equity in North Carolina

Asset Sale vs Stock Sale

Asset sales and stock sales are the two primary legal structures for transferring ownership of a business in North Carolina. In an asset sale, the buyer purchases specific assets and assumes selected liabilities of the business, while the seller retains the legal entity. In a stock sale (or equity sale for LLCs), the buyer purchases the ownership interests in the legal entity itself, acquiring the business with all of its assets and liabilities intact.

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to measure a company's operating profitability before the effects of financing decisions, tax environments, and non-cash accounting charges. In private equity transactions involving blue-collar businesses in North Carolina, EBITDA serves as the primary baseline for valuation, with buyers applying industry-specific multiples to determine offer prices.

Rollover Equity

Rollover equity is the portion of sale proceeds that a business owner reinvests into the post-transaction ownership structure when selling to a private equity buyer. Rather than receiving 100 percent of the purchase price in cash at closing, the seller retains a minority equity stake in the newly recapitalized company. This structure is standard in lower middle-market private equity transactions and is designed to align the seller's financial interests with the buyer's growth plan for the business.