July 2014 | Steven Nemes and Jonathan Harris
Most business owners understand the importance of spending time to develop long term strategic goals for their business. Very few business owners stop to think about what would happen if they become seriously ill or pass away unexpectedly.
This can be the most vital planning that a business owner can undertake – without it many businesses fail. Some of the questions which need to be addressed include:
- Who has the skills and ability to run this business if you aren’t there to do what you are currently doing on a day to day basis?
- Is the business centered on you or could it continue of you weren’t there?
- Are there separate components to the business which could be dealt with differently if you weren’t there?
- Are there key people whom you need to consider as part of the succession plan of the business and what steps should you be taking now to ensure that they receive the necessary skills training to enable them to assume new roles.
If you have a business that has multiple owners, complications can arise if one of those owners dies or loses capacity. Unless there is an appropriately thought out exist strategy, it is possible that the other owners of the business could be engaged in difficult and protracted negotiations with the deceased or disabled owner’s family, often distracting them from the needs of the business.
Appropriately drafted agreements can:
- Detail how the business will continue to function.
- Formulate the value to be attributed to the share of the deceased or disabled owner.
- Regulate how and when that value will be paid.
- Ensure funding with life insurance and total and permanent disablement cover.
Succession planning needs to be a part of any strategic plan for a business. Putting in place an appropriate plan and clear guidelines for those left behind will give your business the best chance of survival.
Please telephone Jonathan Harris or Steven Nemes if you would like to discuss estate planning and how to put an appropriate plan put in place for the benefit of your business and consequently your family.