Your family depends on your business’ income to survive. But your family members might not be equipped to take over the business if you die. You also may have taken out loans backed by your family assets to start or enhance the business. They might also be unable to sell easily sell the business. This could leave your surviving family members without income or even in a position to lose their home, if that’s what’s been used as collateral for a business loan.
An insurance industry group explains, Life Happens: “When a family is must sell a business quickly, they may have to sell at a discounted price or during market conditions that make the business much less attractive. In other cases, without the proprietor or partner, the business may be worth very little.”
If business partners are involved, the family might be unable to step into an important role, partners might be unable to quickly buy out your portion of the business. In this scenario, a family might have to be more directly involved in running the business during a stressful time or be forced to sell the company. Lastly, your business may rely on important key employees whose deaths would seriously dent profits or operations.