This article are provided for information purposes only, and are not intended as legal advice.


Banking concerns for entrepreneurs

February 19th, 2009

If you own your own business and are the only person with signing authority in your company, what happens if you have a premature death.  Many years ago, a client of mine was 35 and had a heart attach and died. The banking documents did not say that the President of the Company could sign the checks, it only said the individual’s name.  The President/business owner did not have a will. As a result, the bank froze the assets of the Company and no one could write a cheque to pay the creditors.  The family had to go to court to try to be appointed the executor and keep the Company going.  First they had to bury their son, then they tried to get an executor appointed.  They were not successful on a timely basis and the customers deserted the company and no creditors were paid.  The bank seized the cash in the Company to cover their loans.  Could this problem been avoided?  Absolutely.  If the owner had a will, the executor could have written cheques to suppliers and employees to keep the company operating until the business could be sold.  In the case above, the Company was liquidated by the bank and the estate did not receive any value for the business because of poor planning.  Without access to the bank account, the staff were not paid and they all left the business. 

 

This was not the way to maximize the value of the business but this shows how important a will is to the survival of your business.


Filed under: Entrepreneurs — Gary Landa @ 7:05 pm


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