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Contingency PlanFor an Uncertain Future
A contingency plan addresses the "downside" risk encountered in succession planning. Even if you are following a good planning process - and certainly if you are not yet following a good plan - disaster can strike suddenly. This planning involves strategies required to cover the death or incapacitation of key family managers.When asked about their contingency plans, many family business owners say that they have purchased life insurance that comes into play when they die. Thanks to medical advances, strokes and heart attacks don't kill nearly as many victims as in the past. However, they can still incapacitate a key family member for long periods of time - sometimes even permanently. When this happens, the life insurance does not come into play.
And it is not always the parents that die first. One client of ours was 67. His succession plan provided the financial security for him to retire in five years. At that time, his oldest son would be age 41 and would succeed dad as president of the business. At age 39, the son and his wife were killed by a drunk driver in a head-on collision. Good contingency plans do not avoid these tragedies but certainly help when a catastrophic event happens. It is crucial that the plans be shared:
Sometimes, when disaster strikes, the survivors need immediate help to keep the business operating and stable.
Family Business Experts can provide an Emergency Response Team as part of your contingency plan.
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