Since the beginning of the pandemic, there have been lots of worries that have arisen. But by far the most prevalent worry is sickness or illness. For the average person, it’s not surprising that they would worry about such a thing especially during a time when we are not able to spend time with our loved ones. But for business owners, the concern may go beyond that.
Many business owners are worried about becoming ill or sick, leaving their loved ones behind. So what can business owners do to ensure stability for their loved ones in case they fall ill?
Protecting your family in the event of illness or death really comes down to proper planning. Planning for sickness or death isn’t something that anyone wants to think about or plan for, but in times of uncertainty, it’s important that we make sure all plans are in place – just in case.
One of the first things that you need to do to plan is decide how you would like your business to be handled if something should ever happen to you. Will you have your family shut it down? Or will they continue running it? Perhaps you should consider selling? In order to keep your business running, there must be a) continued value in it, and b) someone who is willing to run and operate it. If you don’t have both of these things, you may want to consider selling or shutting down.
Once you have your plan in place, you’ll need to generate a will. Thoughts are great but if they aren’t written on paper, they might not hold up legally. Even if your family is aware of your plans, without a will, there could be many legal issues that they run into. A will can help to ensure that your wishes are fulfilled after death.
Within your will, you’ll want to appoint someone as the Executor. This person should be someone you are close with and whom you trust to follow your wishes and instructions. This person will be legally able to make all decisions for your business after death, so trust is very important. Many business owners select older children for this, or perhaps a spouse or other close family member.
What will happen if you don’t appoint an Executor?
If you don’t appoint an executor within your will, anyone within your family will be able to apply to be an “Estate Trustee”. Depending on the dynamics of your family, this can result in conflicts. In addition, you will have no say in who the business is left to, so it may end up in the hands of someone you don’t want it in. For this reason, a will is essential in planning for family security.
What obligations will your executor have?
It’s important to choose the executor of your business wisely and to ensure that they are comfortable with the decision. Being an executor for a business can be a busy task, and can take a lot of time and effort.
Firstly, they will need to assess all contracts and accounts, and determine which ones are worth continuing and which ones to cancel. You should be sure to have all of these listed and organized for them so that they know exactly which contracts they need to consider in the event of your death. Consider online accounts, bank accounts, supply contracts, sales contracts, and so on and so forth.
Whoever is listed as your executor will also need to close your HST accounts and file your returns. If closing the business, the business must be closed and all things must be properly reported.
Creating a will for your business will ensure that your family is protected in the decision-making process in the event of your death. But in addition to your business will, you’ll also want to make sure you create a personal will. This can outline how you would like any assets to be distributed among loved ones.
And finally, you may also want to consider purchasing life insurance in advance. Life insurance can provide your family with financial security in the event of your death. Often times in the chaos that occurs after an expected death, there are additional issues that come up if the deceased was the primary breadwinner. By having a life insurance policy, this will ensure that your loved ones have the financial means to continue on without the stress of money issues.
Of course, all of this should be coordinated with a financial planner. A certified financial planner will look at your entire financial situation and listen to what your goals are and help you set the wheels in motion to reach those goals!
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