Business Owners - What Happens if You Don't Have an Estate Plan?

The short answer to that question is “who knows?”

But I’ll tell you this – the default plan the state has for you isn’t likely to make it easy for anyone when you’re gone. It’s likely to be expensive, emotionally challenging, and require a lot of time waiting on the court’s schedule.

It’s not going to be fun for anyone.

And it’s not going to help your business or your family to recover from losing you. The time it will take will likely be more than enough time for your clients or your customers to go elsewhere. Possibly leaving your family with a bunch of bills and no income to pay them.

As much as we love sharing positive, uplifting stories of rescued puppies and magical rainbows, sometimes we feel the need to deliver a little reality check.

And that’s what we’re doing today. So here you go.

If you’re a business owner and your family depends in whole or in part on the revenue you generate from your business, not doing proper planning can leave them financially devastated at a time when they’re already emotionally devastated.

Is that what you want to leave behind?

Now, I know as well as anyone that throwing lots and lots of information out there may just overwhelm people and lead them to bury their heads in the sand and not think about this issue at all, and I don’t want you to do that.

So I’ve put together a short list of 5 things you should consider for your own planning if you own a business (and you care about your family) in hopes that it will get you thinking – and inspire you to take some action:

1) Does anyone other than you have legal authority to act on your behalf in your business?

If the answer is “no” or “I have no idea,” then this is a logical – and important – first step to take. Make sure someone is. Whether you pass unexpectedly or simply become incapacitated after a car accident, if nobody has the authority to step into your shoes and deal with your bank, vendors, customers, or even have access to your website, you may as well just assume everyone will shut the doors and wind things down.

Picking the right person – and giving them a playbook walking them through step by step of what to do if you need them – can make a huge difference to your family.

2) Do you know what your business is really worth?

If you sell things, you may think the value of your business is limited to inventory. If you provide a service, you may think your service is unique to your delivery of it. But there could be value in other components of your business. You may have unprotected intellectual property that someone else would pay a lot of money to have as their own. You could have a valuable client or customer list. If you’re not sure what the true value of your business is, you may be selling your family short when you’re gone or if you ever need (or choose) to sell.

3) Is there a business partner or employee who thinks they have an interest in the company?

If you don’t have a written agreement explaining what happens when you’re gone, then an unscrupulous partner or employee could easily abscond with all your hard work. Poof! Leaving your family high and dry – and with an expensive, long, drawn out (and possibly losing) court battle on their hands.

4) Do you have life insurance in place?

This is an easy solution to so many problems. If you don’t have life insurance, why not? Do you have sufficient savings to get your family through years of missing out on your earnings? If not, investigate life insurance. Term insurance is often very reasonably priced and other insurance options may be a good fit for investment and tax planning.

Check it out. You’ll be glad you did.

5) Do you know what your family would want to do with your business when you’re gone?

Do they want to run your business? Or would they just want to liquidate, sell, and cash out? It is amazing how many business owners make assumptions about their family’s wishes – assumptions that end up being wrong. Now, while you’re able to, is the time to ask. Once you know what they truly want, you can start developing a plan that makes the most of your collective wishes.

Thinking about just these 5 things is a great starting point. There are so many directions to go! Take a few minutes for yourself and think through these issues. Talk to your spouse, your kids, other family if you haven’t already.

And if you haven’t already done so, just take one little step towards getting it done! If you want to find out more (and cross off taking your first step), click here and book an initial phone consultation with us. We’ll help you get teed up and know what to do now and what to do next.