Every business owner needs a plan if they become disabled or pass away. This process is more complicated when a business has more than one owner. While it is probably not at the top of your “fun conversations” list, you need to talk about it and have a formal plan. Trust me, your family and beneficiaries will thank you.
So, what do you need to think about, know, and plan for?
- You need to have a formal, signed agreement that states what will happen if one, some, or all owners pass away or become disabled and are unable to serve their role in the company
- Most companies would prefer to not have family members jump into the business just because a plan was not in place
- Make sure you plan for more than just death
- Try to think through many scenarios and draft a document that protects the company from even low-probability events
- Is your Buy/Sell funded?
- This means you have a plan in place to execute the plan if something happens
- Your plan could be a life insurance policy for the death of an owner or a disability policy of some form
- Or, you can write the agreement in such a way that allows the company to pay off the agreement over time with cash flow from the business
There are a lot of strategies and considerations. Reach out to our team at Legacy if you have questions about your planning.
Who Not How
By: Dan Sullivan