When you pass away, it may not just affect the people you love. In some cases, it can have a profound effect on your business. This is especially true if you are central to your business. According to Entrepreneur, a business that is dependent on its owner and cannot survive without the owner is called an owner-dependent business. If you have an owner-dependent business, you must prepare for what happens with it when you die.
Because you are central to your business, nobody can take over for you. In a true owner-dependent business, you will not have a partner either. Upon your death, the business will no longer operate. Your heirs may be able to sell off equipment or other aspects of the business and you will need to leave instructions for that.
In addition, many owner-dependent businesses are service-oriented and therefore may have liability issues. If your business has liability insurance, you may want to stipulate that coverage to continue after your death until the statute of limitations is reached for any claims that could be made. This may require putting money in a trust to pay insurance premiums.
You also may want to plan ahead and keep the business small so to focus on profits and savings that your family can use to replace the lost income. It is also wise to set up the limit of transferability to minimize the tax liabilities your family will have for the business upon your death. This information is for education. It is not legal advice.