You were hit and killed by a bus last night. How does your business look today? Will it keep running now that you’re no longer around to oversee it? Are your business, business associates and family facing a chaotic mess?

That all depends on whether or not a business owner or partner has planned for an eventuality like this. Here’s what could happen if you’re not prepared:

  • If you die without a will your provincial government could determine what happens to your assets, including your business
  • If you pass away without the proper insurance, your business can go under due to a lack of funds 
  • If you pass away without a shareholder agreement in place, your spouse could now become a partner to the business

For all these reasons and a lot more, you should have a carefully crafted, and legally binding, shareholder agreement that documents exactly what you and your business partner wants to happen should you or your business partner die.

And yet, fewer than 30 percent of small-business owners have a written succession plan, and many don’t have insurance either*. Why? Because owners don’t want to think about what might happen if they suddenly pass away. But they should.

While a plan should be tailored to the business owner’s specific circumstances and objectives, there are common elements that require consideration, especially around insurance needs.

Key Person Insurance     It’s an insurance policy taken out on the most important person in the company, usually an owner. If the key person passes away, the company gets the proceeds from the policy, which it can then use to continue running the business.

Buy-Sell Insurance In many unfortunate situations, the surviving partner ends up buying the shares of the partner who passes away with their own funds or, worse, with bank debt. With Buy-Sell Insurance, when a shareholder passes away, money gets distributed to the other partner to purchase their portion.

Business Loan Protection     This kind of insurance provides funds to settle any outstanding loans or mortgages.

As well, if you’re injured, but you’re off work for a long time, consider taking out disability and critical illness insurance, which can help you get through your time off by providing the cash needed to service the debt.

Clearly, succession planning and insurance coverage is absolutely necessary to maintain the value of your business, provide financial security for your family and other stakeholders, and provide for the unexpected. Talk to a professional advisor, accountant, lawyer or insurance broker to find out how best to protect your company.


Robin Tomarchio
Financial Management Consultant

Robin Tomarchio - IG Financial Management Consultant - Serving clients in Whitby, Oshawa, Bowmanville, Ajax, Pickering, Toronto and across Ontario. Experience financial freedom and long-term security - call me to find out how. Take control of your future and get peace of mind.

Contact Me

10 + 11 =

Call Now Button