If you or a partner own a business, you must make a plan of succession (or purchase / sales contract or contingency plan) to ensure a smooth transition for the company in case of divorce, disability and / or death . The plan should also be adequately funded by a combination of cash reserves and insurance. If there is no succession plan or buy / sell agreement in place and fully funded, the risk of the company, its future and the future of your family.
Without enhanced by the payment of an estate or buy / sell agreement, death, divorce or disability, the company and its future and the future of his family lead to go up in smoke. If you’re one of 80-90 per cent of employers who do not have a plan up-to-date and find a bomb.
Any plan of succession for the manager or partner has to pay attention to four things:
• Maximize the value of the company
• Planning for the foreseeable problems
• Emergency Plan catastrophic events
• Planning to achieve your goals for the future
Divorce. Based on current data from the National Center for Health Statistics, Centers for Disease Control and Prevention, the pair has a probability of 36% to end in divorce. Your business or commercial interest is probably the biggest asset you have (depending on age and size of their investments in real estate). If you do not have a marriage contract in case of divorce, the husband probably entitled to at least part of its participation in society.
Without a good succession plan could mean a divorce settlement that your ex is now a member of the study. Divorce could also mean that the husband now has its share of the company because they lacked the financial means to acquire their own shares. You could work for his ex, without a plan or buy / sell agreement.
If you have a succession plan, but estimates have been explained in the company’s property and was the divorced spouses are excluded. The plan has also written what will happen to the company in case of divorce of the owner or partner. The succession plan also provides for the establishment and acquire adequate funding of an emergency fund for the resources necessary for the interests of the owner’s wife or partner.
Disabilities. Any type of disability can affect the ability of the owner of a company to continue operating a business or at the same level of contribution rate for the company. Disability can result from an accident or illness. The disability may be partially or completely. Any contractor or partner needs a succession plan specify how the disability of the owner of the company are concerned, a contribution to the Company or terminated. The succession plan should be their future and the future of society.
The disability part of your wealth plan should include:
• How do you think a disability that affects the value of the company
• What other partners will be affected economically
• How will the decision be made on the merits of leaving the company
• Financing Disability insurance to pay for their future
• Effects on the disease and other
• The financing of the company through a transition
• Funding partners their share of the Company in accordance with a plan to buy the succession.
Death. The death should be seen in all age groups considered. What we think death comes one day. The question to be addressed in estate planning, what happened to your business partners, companies and his family after his death. Although the probability of death at the age of 30 is extremely low, it is important to note that there are many more options and choices when it early. The older you are, the more expensive insurance for death and disability. Once you have a catastrophic illness (cancer, heart disease, diabetes) that will be difficult (or impossible) to get life insurance when you intend to achieve, the cost could be prohibitive.
Planning for your death (at any age) can be crucial to the survival of your company. If, for example, the managing partner of a company, his absence will be appointed and trained without a successor, would cause a considerable uncertainty about the future of society. His death could borrow an impact on the ability of the company’s money. A death can also lead to uncertainty and changes in terms of suppliers. Can the loss of key employees. Finally, it could hamstring their partner (s).
No matter how likely do you think is going through a divorce, disability, or die before the age at which these life events could be disastrous for you, your family, your business, and refers to all its lack of an up floor-to-date. You should plan a successor for his role in society and a clear transition. You must maintain incentives for key employees to leave the company during the transition. Must have sufficient cash reserves and insurance you need to buy your partner (s) or its successor (s), their participation in the activities of your heirs. It should also lead to proper business of insurance or financing the company until his successor, the stability of finance companies, suppliers and customers to prove.
Death, disability and divorce are the three entrepreneurs who, when a call starts on estate planning. Unfortunately, only 10 to 20 percent of entrepreneurs who actually have a succession plan. If you’re one of those without a succession plan, you do not think it’s time to do something?
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