Will My Business Survive When I Pass Away?
While you are alive, your small business can seem like an extension of you. Frequently, business owners don’t always make clear distinctions between personal property and business assets. Regardless of the size and scope of your business, you should consult with an estate attorney to help you create a continuity plan for your business after your death or disability.
First make sure that your business is a corporation — not just a DBA or sole proprietorship. Once its a corporation, your business is not reliant on you to exist. The business can take on assets and liabilities, and it is more likely to continue to operate after you pass.
If you have a partnership, then your estate will take possession of your half of the business when you die. You and your business partner need to consult with an estate attorney to make sure the business passes to the other partner and not simply into the hands of your surviving family members.
Many small businesses can’t operate without the owners running the day-to-day operations. If you believe your business can’t survive past your death, you should still acquire a life insurance policy to pay for staff salaries while the business closes its doors. These kinds of “key employee” life insurance policies are also helpful with partnerships making sure the surviving spouse gets paid for the deceased partner’s share of the business. Lastly, if you think your business can survive under the leadership of an employee, then you can use a “key-employee” life insurance policy to help your business hire the right person to help with the transition after your passing.
Your employees and your family rely on your business for income and stability. Without proper planning, your death could put your business into chaos, creating stress and conflict immediately following your passing.