Without any notice, someone’s life can shift through illness, accident, or family emergency. Forethought and preparation, enable you to structure your business to run without you in the event of a short term or long-term absence thereby taking care of your investment and your business. Giving consideration and acting on this plan will empower your wishes to be carried out and give peace of mind to those you love.
Two scenarios are short term and long term. Short Term could be considered six months during which time someone would step in and manage your business. Long term refers to an indefinite timeframe requiring a transition of your investment management and decision making.
Two components in your planning are authority and operation. Consider separation of these positions so that there are healthy checks and balances.
The authority component carries a fiscal responsibly designated to handle the decision-making aspect of your business. This should be someone you trust that has the integrity and skills to run your business the way desire. Do not get tempted by emotions and select a family member if they are not suited for the job. Limited authority can be delegated by adding a designated person on your checking account. Expanded authority comes in a financial power of attorney which should be limited to cover only your investment business. This is a standard form that is available online and does not normally need an attorney although you are always encouraged to seek an attorney’s counsel.
The second component revolves around operation which could be handed off to a property manager or kept in house with a designated person. Make an outline of your business and properties. Include a list of properties including addresses, tenants and their contact information, operational bank accounts, contact numbers for insurance, mortgages, repair service people, and anything someone would need to manage the property. Outline when and how rents are collected and in what bank they are deposited. Outline bills received and what bank account pays them? Finally outline leases with due dates for renewals.
Give a basic directive to remind the operations person to reach out to tenants in the case you are incapacitated. One thing I found is that in the event you are incapacitated you will want to proactively contact tenants to give them new contact numbers.
Amazingly enough, if you go through this exercise, you will find that your business will run smoother with a clearer vision. Good business follows a healthy checks and balances by separating authority from operations. You have built a great business and you want it to be cared for. Loving your family means sacrificing a little discomfort by having a plan.
