Single owner companies are very unique because they have no buy-sell agreement. If something were to happen to a private company owner and he or she did not leave explicit instructions, it presents a serious and unusual problem. In these cases, the ownership and management baton often moves to the spouse who may or may not have the knowledge and capacity to make decisions relative to the company. This scenario can have disastrous consequences for the business and for the surviving spouse of the owner.
There are a handful of things your company can do to prevent this situation. First, you can form a board and provide them with instructions on what to do in the event of the owner's death. If you're not interested in that level of formality, at a minimum you should make sure that there are clear instructions for the surviving spouse about the advisors they should use and the best course of action for the company. It also helps a great deal if the spouse knows the advisors ahead of time so that they have some level of trust and familiarity.
As the Boy Scouts say, always be prepared.
Is your company prepared? Share in the comments.
