What Happens to My Business If I’m Incapacitated Or Unable to Work?

What Happens to My Business If I’m Incapacitated Or Unable to Work?

What happens to my business if I’m incapacitated or otherwise unable to run it? Especially now, with everything going on, what if somebody gets Covid and maybe they don’t die but they’re stuck in a hospital or they’re put on a ventilator. 

If you’re on a ventilator

They’re not able to communicate, and typically, when you’re put on a ventilator, you’re often induced into a coma, so you can’t communicate at all. You’re not there and you could be in that state for weeks or months. And if you’re the CEO or an owner or a 70% shareholder, who is going to make decisions for you? 

You need a power of attorney in place

If you don’t have a power of attorney or something else in place that says who makes those decisions for you, then it causes a lot of confusion. Businesses are stuck on hold when they need, for example, shareholder approval. What if the business is about to be sold and they need written approval to be able to be sold to the company that’s coming in to buy it?

What if that 70% shareholder or that 50% shareholder or the CEO is on a ventilator or otherwise incapacitated? When he cannot communicate, cannot consent, and cannot sign anything, then the business is stuck. They typically would have to go to court and petition the court for something like a conservatorship. 

It really depends on the circumstances. There could be a lot of time and money involved in going to court to try to get consent even if you can get it. But maybe you can’t get it even if you go to court. Or if there’s a power of attorney, is it given to the spouse? This is pretty common with a married couple. There are powers of attorney that are created in estate plans that give the spouse control over making decisions, including what happens with the business. 

 

You need a plan in place

So, depending on what your estate plan says or any powers of attorney, if those aren’t in place, it causes basically a stall in the business when decisions need to be made. So you need a plan in place. 

Whether you give someone the power of attorney to make decisions or whether it’s a third party that you trust, they can at least make those interim decisions while you’re not able to make them. You could bring in other management, or you have some kind of plan in place, so that the business isn’t just stuck and not able to operate.

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