It is a small business month! Check out our Instagram to see some local businesses we love! We also love to help other business owners and their spouses with their estate planning. While this can be a nerve-wracking thought if you do not have a hand in the business your spouse runs, we’d love to offer you support, so you don’t have to worry! In this blog, we will discuss as a business owner, what your spouse should know. Stay tuned for part 2 of this blog where we will talk about what you should know as the spouse of a business owner.
Many times, business owners know all the intricacies of the day-to-day of their business—the payroll, 401k, and benefits packages they pay their employees, how to access private information like bank accounts and accounting software, accounts payable, accounts receivable, and passwords for all the systems and programs needed to run the business. It takes a lot to run a successful business and keep it going. The problem arises if the business owner dies or is incapacitated, and their spouse is left to pick up the pieces and figure out what to do next. This can leave them having to run a business that they know little if anything about. Often times small business owners think they have told their spouse everything about their business because they talk about it every day; however, talking about what you do for the business and giving your spouse a detailed explanation (preferably in writing so they do not have to keep it all in their head) of where and how to access everything they would need to run the business are two very, very different things.
After 38 years in practice, we have found that business owner’s spouses are very often overwhelmed and have little, if any, information or experience in running a deceased spouse’s business. Simple estate planning with wills and trusts provides little help when it comes to operating a business immediately after death. Being able to pick up the pieces and seamlessly step in can be essential to continuing the operation of the business so it can produce revenue for the family or continue to be profitable as the surviving spouse proceeds to sell the business and realize the financial benefit of the sale.
It is vital for a business owner and their spouse to sit down during life and have the business owner brain dump and document key information about the business operations. It is equally important for the business owner to introduce their spouse to the key people that will be needed to continue the business operating profitably to generate revenue or position it for a sale at fair market value. In addition, someone besides the business owner, whether their spouse or a trusted, key employee, need to have authority to act and sign on the essential tasks needed to keep the business operational. One overlooked issue in most small businesses is that only the business owner can write a check or sign contracts, which means that upon death or disability accounts may freeze, access to cash may stop, and the business can no longer take on new business, all of which would be devasting for the profitability and financial health of a business.
Here at the Family Estate Planning Law Group, we have an ongoing client care process where we make sure that the surviving spouse of our business owners is positioned to keep the business operating without interruption after the business owner’s death or disability. If this is something you and your spouse would like to explore, we’d love to schedule a complimentary consultation with you!
