Don’t let your business die with you

Despite your best intentions, your business could die with you.  The asset you worked all your life to build for yourself and your family; your jewel in the family crown and your ultimate retirement asset, could be dashed against the rocks when you die.

Business succession is not a matter of whispering your deathbed instructions to your first born eldest child.  If you believe that, you watch too many Godfather movies.

Here is a brief outline of reality for the future of your business if you die whilst still the owner or a part owner.

• Firstly, the beneficiary who inherits your business could be lacking any relevant knowledge and experience and could be the worst thing that ever happened to your business besides losing you.
• Secondly, the beneficiary you choose in your Will might be happy doing other things and not the least bit interested in your business (despite what they say to your face).
• Thirdly, any co-owners who survive you in the business are not going to be too pleased about suddenly being in business with a perfect stranger.  It was never their expectation that you would be replaced involuntarily by your spouse, friend or family member, who could turn out to be disinterested, lazy and / or inept (and yet still draw an income).
• Lastly, and depending on the timing of your demise, the beneficiary you choose may inherit more debts than assets from you.  Your bank won’t care if you’re dead; they will still want their loans repaid; and upon your death, they will very likely want them repaid in full immediately.

Having no succession plan even for a simple business structure, is just plain dumb!

It is a much smarter decision to pre-arrange the passing on of your business and the repayment of any outstanding business debts in advance, while you are alive and well.

That way, your business goes to a good home at the right price without being a burden on spouse, friends or family.  Your family is looked after because they receive fair value upon your death from a pre-arranged sale.

For more reading about business planning Australia, read The First Rule of planning

Until next time!

Gary

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