Protecting Your Business if You are Incapacitated
If you have your own business, you should think about what could happen to it if you can no longer work. While not having a plan can make things difficult for your employees, there are some ways to protect it from potential incapacity. Now is the time to create a plan.
When you are not around to run your business, it might not bring in as much income. This is especially true for small businesses that might only have a couple of employees. There might be too much work for them to shoulder the burden alone. If you have a serious illness, you might consider a Trust Life Loan, which will let you borrow money against any life insurance policy. It allows you to receive up to 50 percent of the death benefit. When you receive a portion of your death benefit, you can get your personal finances in order, freeing up money for your business.
Understanding the Legalities of the Business
When you first set up the company, certain legal documents were likely prepared. The kind of documents usually varies, depending on the kind you set up. For instance, a sole proprietorship is usually a bit simpler than a corporation. If you have not already, go through these documents to address what might happen if you or any other owners are incapacitated. The formation documents sometimes already have information on what will happen if a partner can no longer work.
You might want to look at the buy-sell agreement as well, in case you decide to sell your business if you can no longer run it. Even if you already have this agreement in place, you can negotiate it anytime. It could be part of a larger document, or it might stand on its own. It allows you and any shareholders or other owners to buy someone else’s portion of the company.
You’ll want to think about insurance as well. For example, you or other partners might have life insurance policies in case something happens to one of you. The proceeds from the policy might be enough to help the other one buy out that part of the company. And you might also consider getting disability insurance to cover operational costs if someone is no longer able to run things.
Other Options When Incapacitated
You could consider transferring the company to a revocable living trust. If you are the trustee of that, you will have control over your company. And if you are no longer able to manage it, another trustee can easily take over. Then, when you are still healthy, you can start training key employees, family members, or other interested parties to take over.
Still, it’s best to do more than just train other to take over. They will not legally be able to do so unless you make some provisions for that. You could have a power of attorney to name someone to take over operations if the owner can’t do that. It’s a good idea to include the company in your estate planning because of the legalities surrounding that.