What Happens If You're Not Here to Run Your Business
The topic of death, dying and wills is typically one that people want to avoid. The question that you have to ask yourself is what happens to your business if or when something happens to you. Will you family be left with no idea how to move forward and run the company? Do your employees know how to keep the lights on if you're not there? Do you have a succession plan in place to make sure that you are training your replacement or have a plan for who that replacement may be?
If you have read my previous blogs, you know that I am not a naysayer or a doomsday kind of attorney, but in this case failing to have the proper protection in place can be catastrophic. You may believe you've set your family up to live the good life while after you're gone, but the reality is that the only way to ensure that is with a proper will and succession plan.
Your personal will should set out what happens with the assets you personally gain form your company, profit sharing, retirement and investments. It may not specify what happens with your business and who can acquire ownership. It will also not describe the succession plan for the business. Who will run the day to day when you no longer are able to, who will make decisions in the immediate aftermath as your loved ones are dealing with your loss. How are these individuals authorized to make these decisions and where does that authority come from?
These are the questions you should be considering when discussing the longterm health of your company. The answer to some of these questions will lie in the structure of the company. Are you a corporation with shareholders who must vote on a succession plan? Are you a corporation who is single shareholder owned (i.e. YOU) and you have no Board who can implement a plan? Are you a partnership who has the task of buying out shares and reallocating resources? Are you an LLC who has no plan in place for transfer of ownership? Or worst of all are you a DBA who cannot operate at all in the face of such a tragedy?
The end of the company is dictated almost entirely by the start of the company. If you have not set out any plan at the beginning you absolutely need to have something in place that is triggered by certain events, in this case your death or incapacitation. Discussion need to be had with the key players in your life, your immediate adult family, your next in command and your partners and/or shareholders. There needs to be an action plan in place for what happens when and by whom.
If your business relies heavily on your license, degree or expertise, make sure there is someone available with the same license, degree or expertise to assume your duties immediately. If no such person is available, put the wheels in motion to find someone, either through in house training/education or from an outside source. New abundantly clear who that person is and where to find them. Leave authorization for them to begin immediately so your family can process your loss and the necessary arrangements.
If you are the only one who holds the financial documents, access to the bills, can make changes to the day to day operations, make sure there is someone available who knows where to access information that you have secured and who can ensure the day to day continues uninterrupted.
If you have a plan that involves a buy out, do you have a buyer in mind, are there terms, is there an agreement? If any of this is true make sure the executors of your personal estate know this and make the terms binding. Your final wishes should not be disturbed because of lack of knowledge or understanding. This is especially true if you are faced with a lengthy illness or have some knowledge that you will not be able to continue with the company in the future for whatever reason.
Finally, have everything in writing. You can have a will for the business and you can lay out just how you want the company handled in your absence. You have options available to you. Ingram Law Firm is here to help and will be having a special on wills and succession planning in the near future, stay tuned to the Facebook page for details.