Statistically you are much more likely to become disabled than to die
prematurely. Despite this fact most people fail to plan for this “what
if ” scenario. Most people also don’t own their own business, so you
are not “most people”. You need to plan for this to take care of your
legacy, your employees and your loved ones, but mostly yourself.
Preparing for the unexpected: Disability
This is the most dangerous way to leave your business if not planned
properly. While life insurance provides an income to your family if
you die, disability insurance provides an income if you become sick
or injured and can’t work. Even if you are an employee with a regular
job, living on disability is very hard on the family, because (a)
they are living on a reduced percentage of the previous paycheck
and (b) there are usually increased medical costs for the disabled
person. Becoming disabled as a business owner creates an even greater
burden, so the need for disability insurance goes from imperative to
My Story: Disability
Imagine you feel fine on Friday afternoon, but during the weekend
you start to feel weak and tired. By Monday morning, you just can’t
seem to get out of bed. It’s not the flu because you have no fever
or sniffles, but every time you eat something you get terrible pain.
You go to the E.R. and they say you seem fine but maybe you have
an ulcer and refer you to a gastroenterologist. Meanwhile you keep
getting more and more fatigued but no amount of sleep cures the
feeling of tiredness. You need to call the gastroenterologist but you
are just too tired, plus your thinking gets progressively foggy. Now
it’s Monday afternoon and you know you should go to work but you
just can’t get out of bed and you can’t really process the emails in your
inbox. A week goes by and all you do is sleep. Two weeks and you
have lost 10 pounds because you can’t eat or even shop.
This was my life in 2017. I am normally a high-energy driver-driver
person who does 100 things a day. But, for 6 weeks I simply could
not get up and did not have the brainpower or energy to find doctors
to figure out what was wrong with me. Thank God for my sister
Debbie and one very good friend who finally got me to enough doctors
to learn I had an incredibly rare disease that most doctors do not
run tests to diagnose. By the time they figured it out, I was in week
34 of a 36 week disease that basically cures itself. Thankfully, just in
time for tax season.
But what if it hadn’t resolved itself? I had always believed if I got sick,
it would be something like cancer, back surgery, or a heart attack, so I
dutifully bought great short-term disability insurance, assuming anything
I got would either be ok within 90 days or I would be relying
on life insurance instead. This situation scared the hell out of me, and
birthed my passion to help every business owner develop a comprehensive
DIE Become Disabled BOOK
This is where the IF I DIE notebook comes in handy, because it can
also be used for IF I BECOME DISABLED. In order for your family
or your disabled self to be able to enjoy the value of the company you
have spent years building, certain steps will need to be taken:
1. Keeping your illness a secret from the customers for as long
as possible, until a sale for good value can occur.
2. Quick sale. If you’re like me and you have to sign most
everything that goes out of the office, the business will need
to be put up for sale quickly and quietly. Include instructions
for which broker to use, or which other relationship
you have formed with a potential buyer. See Buy-Sell
Agreements – even if you have no co-owners at Way #3.
3. Letter to clients/customers. This is the typical “if you are
reading this, I have become disabled and can no longer run
the company in the manner in which my clients have been
accustomed.” This letter will be used to promote the transfer
to the new owner(s).
4. Long-term care and long-term disability insurance to
ensure your needs are met.
5. Plans for dissolution of assets other than your business,
such as your home, if your disability prevents you from
keeping it. This is where a Revocable Living Trust is a good
idea, and you can read more about those at texasprobate.net
or a similar site for your state of domicile.
6. Medical Directive and Living Will to indicate your wishes
in the event of incapacity.
Heavy stuff, I know. But it will be even heavier if your care is left
Excerpt from “50 Ways To Leave Your Business (There Must Be) by Sandra Finch. Now available on Amazon.