A Successful Business Doomed to Fail.

Many of my clients focus so much time building and maintaining their business only to have it fail or not protect their family upon the business owner’s failed health or death.

John built a multi-million dollar business working long hours daily.  It produced high income for him, his wife and three children to live a good life.  John and his brother, the owners, were the main men that made it all happen. 

Unfortunately, most self-made men too often consider that the unthinkable will not happen any time soon.  They also tend to focus so much on their business that they don’t consider adequately how to protect their family.  In John’s case a sudden heart attack left his widow in my office to probate his estate.  His wife’s main complaint was that she wasn’t getting enough money from the business.  John’s brother increasingly had hard feelings paying anywhere near John’s salary to his wife while he ran the business – initially doing both John’s and his work and then having to pay an additional salary for someone to replace what John did in the business. 

John’s wife had no experience nor even cared to work in the business.  After my analysis of their wealth, composed mostly of the business value, little investments and little life insurance, I had to give his wife difficult news.  Not only did they not have a business succession agreement to enable his wife to receive a buyout of John’s interest in the business, but John’s estate owed federal and state estate taxes – due just nine (federal) and six (Connecticut) months after John’s death.  His wife had no money to pay the tax.  Most of their wealth was in the business.  His wife was forced to pay legal fees to negotiate the sale of John’s business interest and sell their beautiful home to cover estate taxes.  Their children’s college plans were put on hold. 

A proper business succession plan formed while John was alive and able to easily negotiate with his own brother instead of his wife having to pay a lawyer to do so after his death, coordinated with an estate plan to protect his family would have dramatically improved his family.  Don’t be like John!