• What’s your out of home succession plan?

    Insider has been lending to media companies for almost 30 years.  On two occasions business owners died suddenly.  One was hit by a train.  Another had a heart attack and died while watching TV with his family.  What happens to your our of home business if you die?  Here are four things you need to be prepared.

    • A will.  You need to be clear on who inherits your assets.  Otherwise your heirs may have to go through a lengthy and costly probate court process.
    • A Trust.  If your out of home business is valuable enough you might want to think about setting up an A/B trust to avoid Federal estate tax and state estate tax.  Federal estate taxes can be as much as 40% of the value of your estate in excess of $5.4 million if you are single and $10 million if you are married.  Many States have much lower thresholds.  Washington state, for instance, has an estate tax of 10-20% of the value of your estate in excess of $2.1 million.  An A/B trust is legal way of splitting your estate to avoid estate taxes.  Talk to your lawyer or financial planner about the details.
    • Written instructions for running your our of home business or selling it.  If you have an executive team or a spouse  capable of running your out of home business, you should have a written document specifying who’s in charge if you die and what your wishes are for the business.  If you are an entrepreneur with no employees or spouse capable of running the business you should have a written agreement authorizing someone you trust to run your out of home business through a sale.  Insider has done this for small lending clients.  Industry brokers like Kalilco or Johnsen Fretty would probably be willing to do this for your as well.  You need to be willing to pay whoever manages your company a fee to run the business.
    • Key executive insurance.  If you’ve borrowed money you should have life insurance policy with a face amount equal to your debts naming your lenders as beneficiary.  If you die your business passes to your spouse or to your estate free and clear of debts.

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