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Business planning for accidental death?

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TreyAllDay

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Hey All,

I was hoping someone might have some insight into this topic. My business is ran 100% by me with no employees, I do about $13K a month and I have four or five large clients who depend on my services. Although it is not crucial to their day-to-day, it would be a large pain if the service stopped working. It is a tech business so the server, code, etc is all password protected by me and the code, as well as setup, although can be deciphered by other coders, is typically difficult to understand for those who didn't write it.

Does anyone have any advice for (or been through) setting up a plan, in the unlikely case that I was, say - hit by a bus? I have a close friend/colleague who would be willing to overview my software and learn the ins and outs, however I would like to leave a portion to my girlfriend to collect profits on operations or on business sale. My girlfriend has no clue how to run a business - but in the case of my accidental death I would want split equity between her and a colleague - and for that colleague to either run the business or figure out how to sell it. I'm assuming this would be a combination of life insurance as well as a will.

Thanks for any advice!
 

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Merging Left

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You basically need to remove yourself from your business - make it Fastlane. If you are the cog that keeps your machine turning, then if something were to happen to you, the machine stops.

However, if you hire people to replace your role, such that the machine keeps turning with or without you, you've now created a system, and the system can be transferred, bought, and sold.

Beyond that, you'll just need to consult with a financial planner about the best organizational structure that would allow you to leave the company to your partner. Probably holding the LLC within a trust that can be assigned to her in the event of your death.
 

Real Deal Denver

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Credit Unions offer their members ridiculously low rates on accidental death insurance.

I think it is a loss leader to find potential clients.

But the terms of payment are very restricted. It has to involve a vehicle of some sort - a car, public transportation, and plane travel is included. It also pays a percentage for the loss of an eye, foot, or hand.

It's not a very inclusive policy, but one that I have added just because it is so incredibly cheap. I think $10 a month for a half million or more insurance.

I'm beginning to think - how bad do I need that eye anyway? LOL.

Get a regular good policy as well that covers everything.
 

Late Bloomer

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Hi Trey.

If the code is useless to people who don't already have your thoughts in their head, you could open source it. This would guarantee that it's available to your clients after you're gone.

If the code has some proprietary business knowledge you aren't prepared to reveal, then set up code escrow with your attorney. In the event of your death or incapacity or unavailability for your business, the code would be released to all current clients.

Might be worth your while to start documenting it now, so that if you're laid low by a bad pizza, you could hire another coder who might have a chance figuring out how the code works.

There should be some way that an employee can log on to the system and push through a client's project if you're not available. Yeah they could steal from you, but employees have had the chance to steal out of the cash box for centuries and there are laws and contracts and courts to deal with that if it happens.

As it is right now, if you die and your will leaves everything about the business to your girlfriend, she'll inherit a pile of servers with mystery code that's totally useless, that can't be sold and that can't generate an income for her or for anyone else. Is that really what you'd like as your legacy?

An insurance agent can explain key man and business continuity insurance options to you, but only you can set up the code and servers so that you don't have to personally hit Enter on every new transaction.

Real Deal, an eye for an eye makes the whole world... paid off!
 

Kak

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I have an EVP that you would take over and due to life insurance my company will be able to buy top talent to replace me and my wife would be set for life.

I wouldn't have even planned for it, but one of my investors insisted on it.
 

ApparentHorizon

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Look into BitLocker if you're on windows.

In such an event, my lawyer has a flash drive he can use to unlock read permissions on one of my backup drives. From there, the client can copy their files, which they have to unlock with a code I gave them during orientation.
 

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