As an entrepreneur, what keeps you up at night? Is it marketing, sales, accounts payable, accounts receivable, payroll, payroll taxes, health care reform or government regulations? You could probably add to this list of worries.
But there’s one concern a lot of entrepreneurs don’t like considering, and it could have big consequences for your loved ones and your employees: If something bad happened to you today, would everyone you love and everything you have be okay tomorrow?
Can you answer with a confident “yes”? If no, then your family and your business may have a huge mess to clean up should you become incapacitated or worse.
Fortunately, the process for making proper plans is as straightforward as identifying the important people in your life, the property (assets) you own and your plans for the people and property in the event something happens to you.
Once those “Three P’s” are identified, you can create appropriate legal instruments to provide peace of mind to all concerned.
Your People
Make a list of the most important people in your personal and business life. You know their needs, wants, strengths and weaknesses. Building this list will show you who can run your business (family or nonfamily member) and perhaps who might need help.
Maybe you have a loved one who will need ongoing support, such as an elderly parent or a child with a developmental disability. Or maybe there’s a need for specific financial assistance—money to help your child attend college. Make sure your last will and revocable living trust provide for such individual inheritance nuances, so the inheritance is properly protected “for” your loved ones and, perhaps, “from” them.
Your Property
What do you own and what do you owe, personally and through the business? If someone had to parachute into your world today and figure out what needed to be managed on your behalf, would they be in for a very unpleasant “treasure hunt”? Clearly documented bookkeeping systems and an “if I am not here” operations manual are essential tools to guide your capable managers and employees should they need to step in.
Truly, the devil is in the details. You are in the best position to provide them.
Your Plans
If you are married, would you want to provide “remarriage protection” for your spouse, your children and even your business after you are gone? Many family and business horror stories involve a common scenario: a new spouse takes over both the family and its business. If your family is a “blended family,” then great care must be taken to avoid disinheriting either your current spouse or your children from a prior marriage.
Speaking of children, some grow up and others just get older. Do you have any concerns with financial maturity or substance abuse issues? If no, have you taken steps to protect any future inheritance from the potential divorces, lawsuits and bankruptcies of your children? Most of the estate plans I have reviewed over the past 25 years are destined to disinherit grandchildren in favor of in-laws.
If you could not manage your own health care and financial decisions, who do you know and trust to make them for you? Unless you make these selections now, a probate judge will make them for you later. Not a good idea. The fundamental solution: a general durable power of attorney (for financial matters) and an advance health care directive (for personal health care decisions).
This is just a very brief overview of a rather complex subject, and proper estate and business succession planning is not a do-it-yourself project. Success (or failure) hinges on organization, planning and execution. Seek competent legal counsel.
