Strong foundations don’t crumble — your legacy shouldn’t either.

By Megan Hammann, Senior Wealth Advisor, Cassady Schiller CPAs & Advisors

When looking at the numbers, statistically, more than half of business owners will exit their businesses for reasons outside of their control. These unplanned exits can be triggered by a multitude of events such as death, illness, disability, divorce, or a natural disaster. These aren’t things that we like to think about, but planning for the possibility of both expected and unexpected events will provide your business and your family with the greatest chance for success.

Business transitions can be a stressful time for everyone involved, even under the best of circumstances. What we often forget to consider are all of the personal and emotional aspects of a business transition and their impact on our family and friends. When a transition happens unexpectedly, the burden it places on your loved ones can be exponentially more challenging because the emotional impact of their new reality converges with  new-found responsibilities they must now undertake. 

Take for example a couple where the husband is a business owner and actively runs the business operations and a wife who works part-time while also caring for their children. If there is an accident and the husband is no longer capable of managing his responsibilities, this changes the dynamics in the family and in the business. Without a plan in place, the wife, in addition to normal duties, will be required to step into the role of CEO while also making healthcare decisions and acting as the primary caregiver to her husband. This can cause uncertainty in the business for clients and vendors and stress in the family, as the wife takes on additional responsibilities that she may not want. For a business owner with partners or employees, this dynamic could be even more complex.  Depending on the family’s personal financial stability, the stresses could grow beyond the logistical pieces of this puzzle and ripple through and impact their future goals.

It is easy to look at your business transition in a silo focusing on all of the pieces that need to come together to ensure a successful exit — hoping that the timing and expectations come together the way you envision.  It is just as important that the same care and attention is given to your personal financial life, so your family can be prepared for whatever life has in store. Exit planning should go beyond a single event and truly consider the long-term financial health of anyone who would be materially impacted by an unexpected exit.

One of the most important steps that you can take today is to ensure that all of your loved ones, even those not directly involved in the business, understand your intentions and ultimate goals. Understanding your mindset offers an anchor for decision making and helps to provide context that allows your loved ones to honor your legacy while also providing for their family. It is also important for your loved one that you to have a clear picture of your current, personal financial position, including the location of accounts, bills, and any current or future financial risks. This financial “check-up” is a great first step in making sure that your loved ones can easily step in to help if a catastrophic event were to happen.

Another step is to introduce your family members to your trusted advisors, both for the business and your personal financial life, to ensure continuity and comfort through difficult times. Sometimes the most important gift we can give to our loved ones is emotional support and peace of mind through difficult times. This is a gift you can start giving today by taking a few simple steps to engage your family in these discussions.

For more information, contact Megan Hammann at mhammann@cassadyschillerwealth.com.

Cassady Schiller CPAs & Advisors is a Goering Center sponsor, and the Goering Center is sharing this content as part of its monthly newsletter, which features member and sponsor articles.