What would your family do if tragedy struck?
Will your family members be able to step in and effectively run the family business and settle your affairs, or will your family be lost in a maze of business and personal dealings they didn’t even know existed? A short time ago, Family Business Magazine ran an interesting piece that shows the value of being prepared and the difficulties that stem from not having your ducks in a row. The Mazzaro brothers had to take over the family business in the wake of tragedy. Their parents built up a successful food business. Then one day both mother and father died in a car accident. Both boys dived into the family business. But it took them a year just to unearth the most basic information, such as the names of customer accounts, how much money the company made, charged or billed. They didn’t know if they could even keep the business. Much of the business information was stored in their father’s head.
A solid plan is the best way to address not only retirement and business succession, but the problems arising out of a tragedy. Such a plan is slightly more involved than simply having a Will. Your Will should be the starting point for what happens with the family business. It should state who gets your ownership interest and provide, among other things, that the executor is authorized to continue running the family business during the period between your death and the end of probate. You should also have a Durable Power of Attorney that will function in the event you are incapacitated. In this case, since you are still alive, a Will won’t cover this situation. You need to appoint someone who can vote your shares and handle business matters; and, be sure to give that person clear authority to do what is necessary for the business to function.
Finally, a written contingency plan is vital. You should include information about where everything is located and how to access it. Set out a document that includes: the places where you bank and the account numbers; accounting information; any brokerage firm(s) where you maintain an account; the location of all corporate and other business records; a statement showing the assets of the business; computer login IDs and passwords so the system (and the accounting, customer, payroll and other information) can be accessed; lists of vendors and accounts payable; names and address of your key advisors: attorney, accountant, financial advisor, insurance professional and others. You should also create procedures for producing, selling and delivering your product or service so another person can step in and maintain business flow.
Remember, you don’t need to do everything at once. Pick one thing that you haven’t addressed such as your estate plan, then move on to another task. Soon enough everything will be in place.
