About 150,000 people die in Australia every year. It is correct to assure most of these people are elderly, however, unfortunately a large number of people who die number in the thousands do so prematurely. Premature death can be defined as dying before your statistical life expectancy. Currently in Australia, average life expectancy for men and women is greater than 80 years of age. If a person still in business dies at the age of 80 or older, one can safely assume the consequences for their family are usually not dire. By this, I mean generally they wouldn’t be leaving behind young children, debts (apart from those in the business possibly) and no savings for their partner, assuming their partner hasn’t predeceased them. However if someone dies at a younger age and many owners are working into their 60s and 70s now, their personal affairs may not be as well organised as they should. The consequences of an unexpected death and disorganised personal affairs would be far reaching for the family left behind in the business they own.

The ownership in every business comes to an end, it’s just the manner and timing that is uncertain. If the income being generated by business is very important to owner and their family, then it’s really important to ensure no matter what life throws up this income is secured.

Many small business owners rely on the value they have built up in their business over a lifetime of effort to fund their retirement; it’s also their superannuation. If this is the case of then there still be this value should they unexpectedly pass away? If the value of the business falls with the death of a business owner, then the owner and their family should take all necessary steps to protect this value. The greater the fall in value of a business due to the premature death of a business owner, the more urgent it is to act on preserving what has been built up. What would the business owner’s family wish to have happened should the worst occur? They are the ones who have to deal with the consequences. Has anyone discussed the matter with them?

I find that raising these issues is difficult as they usually prompt people to do something about it. One of the questions I ask is tell me what would happen your spouse (the business owner) have died yesterday? In this scenario the business owner can’t speak. The family will have to tell me what they expect to happen and I explain the reality depending on how their personal affairs are organised to that point. Sometimes the reality comes as a under shock. However it’s best to get this explained to them in a theoretical sense rather than experience the pain of the reality of being poorly prepared. What would you like to see happen?

About the author - johann

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FPA April 2014 Why do we do what we do?