Owning your own business and being your own boss has its advantages. You can work the hours you want, you can take holidays to suit your schedule and you don’t have a boss looming over your shoulders. However, being a business owner also means you have responsibilities. Those responsibilities include keeping on top of your customer orders, paying staff, paying your taxes and paying all your bills. However, as a business owner, your biggest responsibility is to have a valid Will.
If you are a business owner and you die without a Will, your business could be left in crises and your loved ones may face a future of chaos.
A client of mine recently faced a ‘chaotic few months’ as she had to muddle through her husband’s business and its operations.
The husband, Peter, had a business selling Italian designed handbags online. Mercia (my client and Peter’s wife) was a stay at home Mom and she spent most of her time caring for their two young children aged 10 and 8. Mercia was not involved in Peter’s business. All Mercia knew about Peter’s business was that the orders for the bags were placed online.
Peter died suddenly of a heart attack. He was 43 years old. Peter did not see the need at his age to make a Will. Mercia’s life was thrown into complete turmoil.
All of the business documentation was in Peter’s name. The bank accounts for the business were in Peter’s name. The bank ‘froze’ all of the business accounts. Despite producing a copy of her marriage certificate, her driver’s licence and her passport to the bank, they wouldn’t allow her to get access to Peter’s bank accounts. They told her she had to wait until the Supreme Court issued a certificate to the Administrator before the bank accounts could be accessed.
Mercia didn’t know anything about the process and procedures that Peter had in place for his business. Hence, she couldn’t pay the Italian suppliers for the orders that Peter had submitted before his death. She also couldn’t deal with the orders for bags that customers had placed and continued to order online. She couldn’t do ANYTHING. In short, Mercia was a ‘complete mess’.
Fortunately, they had a joint bank account and Mercia was able to use their personal finances to pay their immediate bills and also pay the Italian suppliers. However, when the funds ran out Mercia had to turn to friends and family for loans.
Mercia endured a horrific few months while she desperately tried to manage Peter’s business and also console her two children over the loss of their father. The final straw on the camel’s back came when Mercia was told that since Peter didn’t have a Will, his assets including the business would be distributed according to legislation. She wouldn’t ‘get everything’ as she thought. She suffered a nervous breakdown.
As a business owner, the idea of starting a business is exciting and a great adventure. When the business is going full speed, you have little time to think of anything except keep on top of the orders or signing up new clients. Having a successful business is a great achievement, however being a responsible business owner is being SMART.
Stop and think for a minute. Are you like Peter and don’t have a current Will? Or will you be like Mercia and face a future of chaos? How would your family cope if you suddenly died? Does your loved one have the ‘keys’ to your business transactions and dealings? Do you have instructions in your Will about your what is to happen to your business? If you are in a business partnership, is your business partner going to get your share of the business or will your spouse get it?? Do you have insurance that will cover the debts of your business?
There are a number of factors that need to be considered for your Will if you are a business owner. If you haven’t got proper strategies and documentation in order for your business, then your family could face the chaos and trauma that Mercia and her children experienced.