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Edition 269 – Tragedy

Written by Dean Robinson.

Around six weeks ago, there was a horrific level crossing accident in Central Western New South Wales. Two men died when their B double truck, carting gypsum, collided with a freight train. It was late afternoon and investigations are still continuing as to the cause of this tragedy.

For most people, such an incident is a news headline. However, for us, it is a little closer to home. One of the two men killed was the uncle of my eldest son’s girlfriend. He was only 50 and has left behind a wife and three children, two of whom are still at school. The family operate a farm in addition to running their haulage business, though his widow is employed elsewhere and has her own career.

Without assuming what contingencies this family had in place, I can tell you from experience that most family businesses are seriously underprepared should a sudden major health incident or death impact the owner. We’re not talking about the estate plan of any individual here, for that is a separate issue. We’re talking about how a business continues when an owner is seriously impaired through health or injury, or passes away.

The only time most business owners consider dealing with this is when they receive bad health news. It’s at that time they decide to get their business and financial house in order. However, that fails to recognise the suddenness of what can happen in our lives.

I’ve now developed a product titled “The Family Business Vault”. In essence, it’s what one of my clients refers to as the “break glass” option and covers a number of key areas, including:

  1. What the business structure looks like.
  2. What the purpose is of each entity in the business structure.
  3. How the entities in the business structure are interrelated.
  4. Who are the shareholders and officeholders of each entity.
  5. Who the key people in the business are, what their roles are and what their roles need to be in the event of “break glass”.
  6. Who the key advisors to the business are and what they know about the business and the family.
  7. A documented understanding of how the business makes money.
  8. Where all the key legal, financial and banking documents are.
  9. What the business owns.
  10. With whom are the main contracts in the business – and therefore the main obligations.
  11. Where the shareholder’s agreement is located?
  12. Where the buy-sell agreement is located?
  13. Details of all the insurance policies including amounts covered, premiums paid and insured parties.
  14. How the family is impacted financially by the business.
  15. Where the personal assets and liabilities rest for the family.

Most individuals find death confronting and, thinking they’re immortal, keep their head buried in the sand and all the business and personal financial information stored in their head. Except, should the unthinkable happen, dealing with the complexity of it all will be considerably confronting for your surviving family, all whilst they’re dealing with your loss.

The Family Business Vault is, essentially, the manual for ensuring the business survives beyond you. Your car and your television come with a manual for how it functions and what to do if something goes wrong – so why shouldn’t your business?

52% of Australians die without a will.
Imagine how many business owners die without a “break glass” option for their business.