Many of my small business clients also realize they need estate planning assistance as well. Once we’ve spent our time together getting their business documents in order, it’s the time to get their personal documents in order too. Even if they don’t want to do a full estate plan at the moment, some basic planning is usually a good idea.
There are three common issues that we need to address together. First, who will manage the finances of the business? Second, who will do the day to day work of the business? Third, will the business have enough money to continue without the owner?
Who Will Manage the Finances?
Front and center is often the question of who is going to handle the financial operations of the business. Especially where the business is run by only one person, this question can be very important. If that person is not married or in a long-term relationship, who will be the person to step in?
To get this resolved, the easiest document to create is a power of attorney. The power of attorney can specify who will take over control of the finances of the company in case the owner is incapacitated.
Who Will Do My Job?
If there are employees, the business owner should consider if there is a natural person who could take over. That person can be part of the planning process. A good idea is to work with that person to create a plan detailing what that person should do in case the owner is incapacitated.
If there isn’t a natural person to take over, then the owner should make alternative plans for who could take over. They should make sure that the plans are in writing and others know where the plans are kept.
Will the Business Have Enough Money?
If the owner is absolutely vital to the business they may want to consider key person disability insurance. The insurance is purchased on the life of the owner. The company pays for the policy and is the beneficiary of the policy. This insurance is also common where two partners run a business. By purchasing a policy on each owner, the business is protected in case something happens to one of them.
If you’ve been considering business planning, or this is the first you are hearing of it and would like more information, call my office to set up a meeting and we can discuss if it is the best option for your situation – (877) AMAYERS.