Why Incapacity Planning for Business Owners is an Indispensable Component of Your Plan
Most business owners prepare an estate plan because they are concerned about what will happen to their business after they are dead. However, a properly-prepared estate plan has the added benefit of allowing you to make plans for what happens if you are incapacitated or if you need to be away from the business for an extended period of time.
As the owner, you are responsible for the day-to-day operations of your business. This is a full-time responsibility. But what will happen if you can’t be there all the time? According to Social Security Administration estimates, 1 in 4 20 year-olds will become disabled at some point before they retire, and the changes of incapacity only increase as you get older. But you don’t necessarily have to be in a coma to be unable to participate in your business. You could be on an extended vacation or have a medical diagnosis that requires you to take several months away for treatment or recovery. During this time, your business needs to continue on so that you and your employees can continue to take home money.
It is important to think ahead about who will be in charge of the day-to-day operations, because a ship without a captain can be dangerous. The person running the business in your absence needs to understand the business, have the respect of your employees, and be confident in making tough decisions. Without this planning, everyone could jump to the conclusion that he or she is in charge, or alternatively, no one will step up to lead. The result, either way, is chaos.
If you have family members working in your business, it is important that they understand what will happen in your absence and who will be in charge. This assures that everyone’s expectations are set ahead of time. That way, no family members incorrectly assume they’ll be in charge. It’s important to remember that just because your family is involved with your business now does not mean that he or she is the best choice to succeed you. Nobody wins when the wrong person is put in charge and the business suffers as a result.
A good estate planning attorney can help you develop a plan to keep your business running while you are away. From choosing the right individual to putting processes in place for your incapacity, the proper plan can ensure that your legacy is preserved.