Preparing for a death in an Illinois small business

When people embark on the adventure of opening their own business, the last thing they want to think about is death. However, it's important for every Illinois small business to think about what will happen to the business if one of the principals of the business passes away. Several things can be adversely affected by the death of a key person in a business if provisions aren't made ahead of time.

In many cases, people take out loans in order to fund the start of a business. Many lenders include a provision in the loan documents that they can demand the balance of the loan if one of the signers dies. One way to combat this is to have "key person" insurance. This is insurance that will kick in if the key person in the business named in the policy dies.

There are also businesses that start up with the use of funds from investors. If there is no plan in place for the loss of one of the principals of the business, investors may decide to back out of the business. If there is forewarning, bringing investors together to determine a course of action can end up saving the business. In the alternative, having a plan in place from the beginning can not only give investors peace of mind, but also those involved in the business.

It can be exciting for Illinois small business owners to start a new business. However, it's important that all of the details be taken care of in advance to protect everyone involved in the business, and that includes preparing for the eventuality of death. It may be beneficial for the principals to take the time to make both the business and legal preparations that will give the business the best chance to succeed.

Source: Time, Business Life After Death, Lauren Simonds, Sept. 20, 2013

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