What Can Happen to Your Business When You Die or Become Incapacitated
Preparing your company for your incapacity or death is vital to its survival. If you haven’t planned appropriately, your business can be disrupted, harming your customers, employees, vendors, and ultimately, your family. For this reason, proactive planning – including coordinating your business with your estate plan – is key. Below are some negative consequences you may encounter if you haven’t planned and tips on how to protect your company and keep the business on track and operating day-to-day in your absence.
1. Your Business May Shut Down
So, what happens if a business owner dies without a plan in place? Or, the owner of the business is in a coma because of a car wreck and so unable to run the business?
It’s entirely possible that the business could close with nobody to take care of day to day management. Even if a family member or trusted employee knows what’s needed they may not have the authority to take some actions. Legal documents and bank accounts may not be accessible which could put operations at a standstill. Third parties may not be willing to work with those who try to step in to run your business.
Also, the business could be tied up in a court process lasting many months, if not longer, potentially further disrupting business operations.
2. Valuable Business Information May be Exposed to the Public
If you haven’t planned or even if you have planned, your ownership interest in your business may be subject to probate court. This means that the public, including business competitors, will be able to see the value of your interest in the business as well as that of other property. What if you family needs to sell the business quickly? Potential buyers now have valuable information with which to better negotiate buying the business from your family.
Prepare for the Unexpected !
Small business owners are often extremely busy focusing on building the company and keeping it running on a daily basis. So, it can be really hard to get their attention to address certain issues that can greatly affect the business – death and incapacity. But not addressing these issues may jeopardize the business you worked so hard to build. Younger business owners tend to think it will be many years before they have to worry about these matters but the fact is that this can happen to any of us at any time! The right plan can help keep your business running regardless of what happens.
Not only should you have the proper business documents in place, like an operating agreement, buy-sell agreement, etc, but the right estate planning documents can be just as important.
Contact an Estate Planning Attorney
Having a plan for your business in the event you are unable to continue managing the company is essential to keep the company going. An attorney can explain the many options you have to protect your company so that you can focus on what you do best – running your company.
Contact Hamrick Law today to get started protecting your business !