Final answer:
When the owner of a sole proprietorship dies, the business typically dissolves, since the business is an extension of the owner. The assets and liabilities of the business become part of the proprietor's estate and are settled accordingly. A formal transfer would be required if heirs want to continue operating the business.
Step-by-step explanation:
What Happens to a Sole Proprietorship After the Owner's Death?
When Silvano, the owner of Textbooks Plus, a sole proprietorship, passes away, the typical outcome for this type of business structure is that it will dissolve. A sole proprietorship is an extension of the owner, with unlimited liability, meaning that the owner is personally responsible for all debts and obligations of the company. This personal responsibility does not inherently transfer to heirs or other individuals upon the owner's death.
After the proprietor's death, the assets and liabilities of the business become part of the deceased's estate. These assets and liabilities will be managed according to the will of the deceased or, if no will is present, then according to state laws of intestacy. While an heir can take over the business operations, a formal transfer of ownership would be necessary, and the business as such does not automatically pass to Silvano's heirs. Alternatively, the business could be offered for sale, or its assets liquidated to pay any debts owed.
Thus, option 1) 'It will dissolve' is generally the most accurate answer without further context about Silvano’s estate planning or intention for the business after his death. However, the specifics can vary based on how the estate is handled.