In view of recent developments in my family, the death of my brother, I wanted to write this article for all of those professionals (surveyors, engineers, attorneys, accountants, etc.) out there who are either sole proprietors, or one of two owners. Ultimately the article is about business succession, but I might wander a bit.
In Memory of Allen Maxwell, PLS
First, William “Allen” Maxwell was a Professional Land Surveyor in the State of Alabama, a fact he was very proud of. Allen started out long ago, as I did, working with my Dad, surveying in the Talladega county area of Alabama. We seemed to get most of the work on the most mountainous land in the area. Of course, with the beautiful Cheaha Mountains visible from our house, we were destined to spend a lot of time there. As the oldest brother, I blazed the trail for my other two brothers, Allen being the youngest. Our middle brother escaped and went to work with Delta Airlines, lucky duck. But Allen and I got land surveying in our blood. Allen worked for a short time building houses, did a stint with the Alabama Dept of Transportation, then with the City of Opelika as a surveyor. Everything just kept pulling him back to land surveying. When I started my business in Montgomery in 1991 he started part-time with me, then this turned into a full-time job when we moved to Auburn in 1993. For the next five years Allen worked with me to build up a pretty good business. But, the call of those mountains was too much when he got his license. He moved back to Munford and started taking over my Dad’s business. Since then he has worked in the Talladega county area, continuing a long family tradition. He was well respected by folks he worked with, and had a slew of personal friends, in addition to two grandkids that he doted on. We buried him on the mountain, in a cemetery that he had recently surveyed.
Following The Funeral
What happened after the funeral drove me to write this article. Allen liked land surveying, but HATED paperwork. As it turned out, this hated paperwork included a will, life insurance, accounts receivable, and organized client list. But, as a 49 year old man, in not too bad health, I can’t blame him too much for not thinking too much about a will or life insurance. But, that little bit of paperwork would have saved his family quite a bit of expense and trouble.
If you’re reading this article right now and thinking about the fact that you don’t have a will or life insurance, please put it on the TOP of your to-do list – for your family. NOW. Do it… Stop reading and write it down. OK, now continue reading.
A Written Witnessed Will is Necessary
A simple “written witnessed will” accomplishes two things – first, it appoints an “executor” or “administrator” of your estate. This step is crucial. This person must be willing and able to go through all of your personal and business life and compile a list of everything you owned. In the will you can also allow this person to act without a bond. (Getting this bond is both complicated and expensive.) With no will, you have to ask the court’s permission for someone to act as your administrator, and that person must furnish an administrators bond. Secondly, a written will directs your executor about who will receive your assets. Don’t leave this to a judge to decide for you, get a free will form from the internet. If you have a large estate, then a will allows you to employ a number of relatively easy tax planning devises to save on federal estate taxes. (Not a problem with our family.)
Debts & Debtors
Thankfully Allen only had one debt on a house he was renting out. The bank (who shall remain nameless because I’m sure they’d sue me) called their lawyer to discuss foreclosure the DAY that he died. Cold hearted bastards? Yes, but they have a right to protect their interest too. Again, an executor could step in and assure the bank that there was a plan for this loan. In this case, the loan was less than the value of the home, so we will be able to sell it and pay off the debt – AFTER we get an executor and a bond. In the mean time we have to continue paying the monthly payments. Again, our situation is VERY simple compared to others, I’m sure. In considering what my relatives would have to go through, I feel sorry for them. This is where a life insurance policy would come in handy. A Term Life policy, which matches the term of the loan, would be able to pay off the loan for your family. And Term Life policies are the least expensive kind.
Business Succession Plan
The next issue that came up is that Allen’s business was solely dependent on him, as the licensed surveyor, in order to be viable. Without a licensed surveyor, Maxwell Land Surveying couldn’t carry out its day to day operations. This is the case with most any professional business. Non-licensed employees or heirs cannot continue to run the business. Therefore, there is a great need for a business succession plan. What is the plan? That’s for you to decide. Maybe you have a business acquaintance that you could form an agreement with to purchase the business in the event of your death. They might want the same from you. Maybe you have a family member (like me) who is also licensed. Have a plan in place so this isn’t a lot harder than it needs to be. I could let my brother’s business go away – with all of the good will, the 50 year old phone number, the old files, and the client list vanishing into oblivion. But, to help my brother’s family, I’m going to have to go through the courts and make an arrangement for the purchase of the business in order to keep it running. Again, a will that spelled out what you want to happen to your business is a must. And a life insurance policy would give some needed cash to take care of the employees and pay the business debts during the transition.
What If You Don’t Die, But You’re Disabled?
I hadn’t thought about this one at all until my sister brought it up. So, you have a will, and life insurance. But what if you don’t die, but you can’t work. Granted, with the little field work that I do now, unless my brain is affected, I can still order people around. But, what if my brain is affected? Your plan is not complete unless you take disability into account. There will also be a transition period here. And, you’ll definitely need someone you can trust to carry out your wishes. There is a type of insurance called “critical illness” which can cover critical illnesses, chronic illnesses, and terminal illnesses. There’s also disability insurance. Look into these. Euthanasia is not a legal option yet, even though that’s what I suggested to my sister if I was brain injured.
In conclusion, the most important thing you can do for your family and/or business is to have a Written Witnessed Will. Secondly, carry the most life insurance you can afford. Thirdly, develop a business succession plan for your professional business. And, don’t forget to think about the possibility of your disability. I know that this seems like it turned into an ad for life insurance, but believe me, cash is much needed by your family after you die. Talk about it with your family, the subject shouldn’t be taboo.