I remember a bit of doggerel that was a favorite of my friend’s, in our early school days, which began, “have you ever thought when the hearse came by, that you may be the next to die?” The rest of the verse describes what happens after death in a morbid and disgusting way, so I won’t repeat it here. But, the question posed in the first line is important.
None of us know when our turn will come, but we know it will. If it does during our working life, are we prepared to make sure that the business we’ve built, and the financial security it provides for our families and employees survives us?
Recently, a principal in an agency my company is a partner in, passed away unexpectedly. This isn’t the first time something like this has happened. In some cases, the principal was well prepared, the agency itself survived and the heirs could determine how to proceed, secure in the knowledge that the value the principal had built was safe. As in the recent case, however, lack of planning leads to confusion, disruption, and potential loss of value and income.
What happens to your business when you’re gone is entirely up to you.
Of course, it’s not pleasant to think of our own demise. But, as a business owner we have no responsible alternative. At a minimum, here are some things each of us should do:
1. Prepare or update your estate planning documents.
2. Prepare a list of important items that anyone running your business, after your death will need. Those include: list of passwords, list of bank accounts, list of carrier agreements and contact information, as well as anything else someone would need to know to run the business.
3. Advise partners, employees, carriers, and family of what you would like to occur, after your untimely death, to assist either a remaining partner or spouse.
4. Purchase life insurance to give the business extra cash to operate during a transition.
There are other things that need to be done to be well prepared, so this list is just a start. A discussion with your attorney, CPA and family, among other things, is also a good idea.
The end of the little doggerel quoted above says “…and that’s what happens when you’re dead!” Death is a part of life and comes to all. What happens when you’re dead is up to you.