Business owners need a will to prepare for the unknown
Office Mentor
What the heck is a business will? It's a document that informs those left behind what needs to be done with your business, should you not be able to work. You may have had a stroke, or been in a car accident. We don't know what lies ahead, so it pays to consider a business will. 
After the sudden deaths of several entrepreneurs in my life, I was forced to consider what would happen to my business in the event of my untimely death. My husband would need to take care of all the personal details. But who would look after winding down the business side of my life? Who could I ask to take care of this final responsibility? It seemed morbid to approach anyone about such things.
When my cousin died, he left his business to a key staff person. This trusted friend took over and it's been a real success story. The business lives on, growing on the sweat equity that was built by the team.
Another relative left a messy desk with a trail of cheques and cash strewn about his desk and in his truck. His daily planner was hard to decipher. His client list had been mostly in his head, although some of them were on a handwritten list. It seemed nearly impossible to notify his clients that he would not arrive for their monthly appointments. We re-taped the business voice mail to direct clients to another entrepreneur who could meet their service needs. Then, we rolled up our sleeves and dug in to wind down the business.
As a sole proprietor, I've simply prepared a list of things that need to be taken care of to wind down my business. I've also created a list of people who could be approached to support my husband in doing this final work.
In the case of disability or death, please follow these guidelines:
- Cancel all upcoming appointments (in my daily planner);
- Re-tape the voice mail;
- Update the website;
- Find client database and send e-mails to notify and thank them;
- Contact suppliers to update them;
- Call lawyer and accountant to get guidance;
- Locate banking details (including safety deposit box);
- Know where to find computer passwords;
- Cancel all marketing efforts (or advertisements);
- Review credit cards and business banking statements;
- Cancel all monthly charges;
- Notify professional associations;
- Empty storage locker;
- Liquidate inventory;
- Save all receipts for tax return.
Will there be a business if you die before your business does? Who will be in charge of operating your business if you could not? And who would be left with the details of closing out your business? How much do they know about the nature of your business? Do you need to write out some detailed instructions?
Because there is no distinction between the proprietorship and the proprietor, personal assets may be used to meet any business debts.
If you are the only one who brought in income for the business, it's important to deal with winding down your business as soon as possible. And, if your business is incorporated, it adds another element of responsibility to close it down.
My father, now retired, was an estate planner, so I had my first personal will prepared at 18 years of age. I've had it rewritten once, when I was going to travel after 9/11. When I reworked my will, we also prepared a living will as well as assigned my power of attorney.
While you're considering a business will, it's a good idea to create or update your personal will. It was easy when I had a lawyer to guide me through the process, but it's a little hard to do this work on your own. Be aware that when we don't take care of these things, the government claims a large chunk of our estate.
Is everything in place to maximize your assets? Do you have enough life insurance? Take the time to prepare these details. Our loved ones will be going through enough just dealing with the loss of us from their daily lives. Let's ensure that they know what we wanted done to conserve and distribute our business assets.
Elizabeth Verwey owns and operates Small Office Mentors and is asking her clients to prepare personal and business wills. Visit www.officementors.com.
