{"id":108237,"date":"2023-03-06t11:55:44","date_gmt":"2023-03-06t16:55:44","guid":{"rendered":"\/\/www.g005e.com\/?p=108237"},"modified":"2024-08-07t23:09:37","modified_gmt":"2024-08-08t03:09:37","slug":"solos-need-plans-for-death-disability","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/03\/06\/solos-need-plans-for-death-disability\/","title":{"rendered":"solos need plans for death, disability"},"content":{"rendered":"

\""sorry<\/a>checklists for pre-planning … and for recovery in a worst-case scenario.<\/strong><\/p>\n

by ed mendlowitz<\/i>
\n77 ways to wow!<\/i><\/a><\/p>\n

every sudden death or disability is a tragedy. for those who own a business and do not have a contingency plan in place, their legacy is confusion, high costs, stress and anxiety for their family, employees, customers, vendors and everyone else who depends on that business in some respect.<\/p>\n

more: <\/b>when an owner dies without a buy-sell agreement<\/a> | are you ready for a co-owner to drop dead?<\/a> | simple controls can prevent fraud<\/a> | charity directors must take theft seriously<\/a> | forensic techniques can be fraud deterrence<\/a> | the hazards of poor internal controls<\/a> | rule #1: start with cash<\/a>
\n\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

businesses are organic in that many people depend on them for many things and do become part of people\u2019s lives. owners who do not plan, shortchange those they leave behind … saddling them with doubt and many times with unnecessary and unfavorable consequences. lack of planning is not done through ignorance, but through arrogance. making plans for your death is difficult and unpleasant … but it is a necessary part of life. it is a courtesy for those closest to you who contributed to your success.
\n<\/p>\n

checklist: 15 consequences that could have been avoided with planning<\/h3>\n

here is a listing of some of the things that flow from not planning and could possibly be avoided with a little bit of work:<\/p>\n

    \n
  1. the business will need to be liquidated or sold by someone who either doesn\u2019t know how to do it or someone who might not be authorized to do it for a delayed period of time.<\/li>\n
  2. any sale or liquidation will be done under stress with much lower receipts than could have been obtained with an orderly plan.<\/li>\n
  3. employees will need to be let go or salary payments will be in doubt. responsibilities and loyalties will not be clear to them if they stay.<\/li>\n
  4. long-term employees might not receive minimal severance payments. or they will quickly start looking for a new job and will not be available to help with the process of unwinding of the business.<\/li>\n
  5. customers expecting deliveries or services will be left unaware of what they will receive and when.<\/li>\n
  6. customer projects might have to be canceled with penalties or continued at losses.<\/li>\n
  7. contracts will be defaulted on with undue costs.<\/li>\n
  8. leases will encumber asset transfers and will carry penalties if broken, or ongoing costs if maintained without a viable operating business able to make continuing payments.<\/li>\n
  9. loan repayments can be in doubt … sometimes forcing the bank to act precipitously.<\/li>\n
  10. family conflicts are more likely to arise with confusion and no clear instructions or mandate.<\/li>\n
  11. litigation will be probable.<\/li>\n
  12. valuation experts might need to be engaged, as will attorneys.<\/li>\n
  13. a surrogate\u2019s court might appoint people to run, liquidate or oversee the business with added costs including bonding, accounting costs, attorney fees and reporting fees.<\/li>\n
  14. accounts receivable will need to be collected, inventory sold, work in progress finished or penalized if abandoned.<\/li>\n
  15. tax returns will need to be filed and accountings made to beneficiaries and the court.<\/li>\n<\/ol>\n

    problems don\u2019t disappear if they are ignored \u2013 they fester and grow. putting simple plans in place can make unpleasant necessary actions easier and less costly to bear. planning doesn\u2019t affect an owner\u2019s independence or actions and has no consequence unless a sudden death or disability. plan and don\u2019t be a jerk!<\/p>\n

    contingency plan for a sole business owner dropping dead<\/h3>\n

    here are some illustrative points that can be used to get you started toward a plan to continue, sell or wind down the business if a sole owner drops dead or suddenly becomes disabled. the goal is to prepare so someone can quickly assume control of the business and continue operations.<\/p>\n

    checklist: six first steps<\/strong><\/p>\n

      \n
    1. place ownership in a living trust.<\/li>\n
    2. the owner would be trustee as long as he is able to perform all duties. death is easily defined. disability would need to be defined in the trust agreement.<\/li>\n
    3. someone of owner\u2019s choosing would be selected as the alternate trustee who would only become elevated to trustee upon owner\u2019s death or the \u201cdisability.\u201d<\/li>\n
    4. an alternative to the living trust for disability is a specific durable power of attorney. however, this would not be effective for death.<\/li>\n
    5. another alternative, also less effective, is to elect another officer, e.g., assistant secretary, with bank signatory power as a fallback.<\/li>\n
    6. either as part of the living trust or in a separate agreement of instructions, the owner would spell out his wishes, as suggestions, of how he wants the business to be operated. it would be suggestions because things change and the trustee (or person acting under the power of attorney) should not be bound by what he writes in the agreement.<\/li>\n<\/ol>\n

      checklist: ten critical decisions<\/strong><\/p>\n

        \n
      1. the trustee (as i will refer to the person operating the business) as \u201cowner\u201d and the person controlling the trust would immediately arrange to become a signatory at the bank accounts (if not previously arranged).<\/li>\n
      2. various key people that the owner will list will be consulted in hiring and firing, scheduling staff, billing customers, customer relationship contact and other issues that will be identified by the owner in meetings with the alternate trustee. these meetings should take place at six-month intervals before<\/strong> any disability or death.<\/li>\n
      3. payroll payments would have to be made as scheduled and this would be one of the early actions, as would the continued servicing of customers or clients and meeting with customer contact people to assure them of the continuity of the business.<\/li>\n
      4. cash-flow distributions to the owner\u2019s family will be made to provide for any care he needs. this would be done in conjunction with his health care proxy person.<\/li>\n
      5. if it appears the disability will be prolonged, or if there is a death, a decision will be made whether to sell or continue the business, and whether someone should be hired to handle day-to-day operations, in effect to become a general manager or chief operating officer.<\/li>\n
      6. long-term decisions such as lease renewals, pricing changes or hiring permanent management personnel, with exception of a general manager, should be deferred as much as possible.<\/li>\n
      7. any plan should be in writing and discussed with the company\u2019s banker (if large lines of credit exist) and any other \u201cinterested\u201d party.<\/li>\n
      8. compensation should be established for the trustee based on a fixed amount for oversight and responsibility and a payment arrangement based on time, value creation or staff working on the company\u2019s activities. additionally, the trustee should receive a payment for assisting in the sale of the company.<\/li>\n
      9. communications with family members will need to be kept open and the existence of this arrangement should be told to them.<\/li>\n
      10. arrangements to sell the business should start after the operations are stabilized.<\/li>\n<\/ol>\n