You know that planning is the way to work smarter rather than harder to make your business successful. In addition to providing a good life for yourself and your family, both before and after death, you want the satisfaction of leaving a successful business that survives you. There are three types of planning you can do so your achievements survive you: in the short term and in the long term before death, and then after death.
For the short-term possibilities, make a plan for the different events in life when you are not working 100% whether it is a minor or bad accident, or just want to spend some of your success on a well-deserved long vacation.
In addition to insurance (talk to an experienced broker), and cash flow solutions for financial emergencies (talk to your banker and CPA), you need to make a Power of Attorney (POA) for both your business and your family responsibilities. You need to identify who you trust to manage your business for you if you cannot for any reason, and give them a POA that provides the specific authority to make all required business decisions. You also need to give a POA to your spouse or other person to make family financial decisions for you even as simple as renewing your car insurance if you are the only owner. A person appointed under a POA has fiduciary duties and responsibilities like an Executor, so help them help you avoid disappointment by providing details in your POA about what you want done when and how and why.
For the longer-term events before death, such as a bad accident or in a coma etc, when it is not likely you will return to your business, then in addition to a POA for financial decisions you should have a document such as a Buy-Sell Agreement with your business partners which states who and how your business can be sold.
Further, you need to address medical decisions not just financial issues before death. Make a Representation Agreement which details how you want medical and related financial decisions to be made for you – including your views about the quality of your care if you no longer have the capacity to make decisions but are otherwise physically healthy eg brain injury; and how long you should be kept alive mechanically if there is no hope of recovery. If you have no disability nor long term care insurance then you are basically asking your family and business partners to spend all of your monies on your care – which can quickly exhaust any inheritance you hoped to give to your survivors. Talk to an experienced broker.
For after death, the primary estate planning document is your Last Will & Testament (“Will”). Your Will has no effect until your death; and your POA and Representation Agreement cease on death. You can detail in your Will who will manage then sell your business and who will administer your estate before it is distributed to your named beneficiaries.
Remember to name both primary and alternate appointees in all your documents because life events happen to them too. Also remember to review all your planning documents every six months to confirm nothing has changed eg different business, different spouse, different beneficiary, etc.
Submitted by Andrew Liggett, BA JD CD, esquire
www.SeatoSkyLaw.ca, wecanhelp@seatoskylaw.ca, 778-728-0208
