But for some businesses, operations would come to a grinding halt without certain essential contributors—key persons as we call them. If your business includes any key persons, key-person insurance should be a part of your business insurance planning.

What is a key person?

A key person is someone associated with the business that provides a significant, direct economic benefit. Economic benefit not only includes profits, but also considerations such as cost savings, goodwill, credit access, and customer access.

Business owners—particularly those of a small business—are often key persons. Some additional examples of key persons are:

• A salesperson with well-established or numerous business contacts
• An employee with specialized expertise
• The inventor of the product
• A programmer who wrote the foundational code
• The owner with relationships that result in favorable credit terms 

How does key-person insurance help?

Key person insurance compensates the business for any financial loss or cost incurred because the key person suffers an insurable event (death or extended disability).

These are just a few reasons why it is important for you to know the following about estate planning:   

Minor children can be legally protected with a Kids Protection Plan, which provides parents with important legal tools to name short- and long-term guardians, provide instructions and guidelines for those guardians and execute medical powers of attorney that allow you to dictate medical care for your minor children in case they are injured and you are not with them.

A will and a living trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes.  A living trust can take effect while you are alive or after death.  It allows you to hold assets for your benefit during your life, which may prove useful if you become incapacitated in the future. A living will can also be beneficial if you own real estate in another state. A will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.

Women need to execute financial and healthcare durable powers of attorney and consider choosing a member of the family if that person is willing to assume the responsibility of making financial and/or medical decisions on your behalf in case of incapacity. And, if you are married or partnered, make sure your spouse or partner does the same because you’ll be the one who is handling things if anything happens to your spouse/partner and you want it to be as easy as possible.

Last week, we shared the first part of our series on the importance of estate planning for those without children. If you haven’t read it yet, you can do so here. Here in part two, we discuss the other risks involved for those who forego estate planning.

Someone will have power over your health care

Estate planning isn’t just about passing on your assets when you die. In fact, some of the most critical parts of planning have nothing to do with your money at all, but are aimed at protecting you while you’re still very much alive.

Advance planning allows you to name the person you want to make healthcare decisions for you if you’re incapacitated and unable to make decisions yourself.

For example, if you’re temporarily unconscious following a car accident and unable to give doctors permission to perform a potentially risky medical treatment, it’s not always clear who’ll be asked to make that decision for you.

If you have a romantic partner but aren’t married and haven’t granted them medical power of attorney, the court will likely have a family member, not your partner, make that decision. Depending on your family, that person may make decisions contrary to what you or your partner would want.

Indeed, if you don’t want your estranged brother to inherit your property, you probably don’t want him to have the power to make life-and-death decisions about your medical care, either. But that’s exactly what could happen if you don’t proactively plan.

It establishes the expectations in the relationship and enables employers to deal with similar situations consistently. Typically, employers do not intend for the handbook to create any obligations that could be enforced by their employees. However, a poorly drafted employee handbook could open the door to contractual liability.

Inadvertent Alteration of At-Will Employment Relationship

The problem that arises most frequently from an imprudently written employee handbook is the unintentional creation of limitations on the at-will employment relationship. In the absence of an employment contract to the contrary, employees are generally employed “at will”. This means that they can be terminated for any reason (including no reason or even a bad reason—unless it’s illegal) at any time without any warning. The at-will employee may also quit at any time and for any reason.

The potential for litigation emerges when employee handbooks contain language that can change an at-will relationship into one in which the employee can only be terminated “for cause”.  This can happen when the handbook includes provisions that an employee could reasonably believe provide job security. For example, the following types of provisions could limit an employee’s at-will status:

• Lists setting forth reasons justifying termination
• Procedures requiring warnings or suspensions prior to firing
• Appeals available to employees to challenge disciplinary action

But the fact is, it can be even MORE important to do estate planning if you have no children.

Some of the common thoughts behind this mistaken belief may take one of these forms:

“If I die, everything will pass to my spouse anyway, so why bother?”

“I’m single with little wealth, so who cares who gets my few meager assets?”

“Estate planning is an expensive hassle and it doesn’t even benefit me because I’ll be dead, so I’m better off letting a judge handle things.”

This kind of thinking ignores several basic facts about both estate planning and life in general. Regardless of your marital status, if you don’t have children, you face potential estate-planning complications that those with children do not. And this is true whether you’re wealthy or have very limited assets.

Without proper estate planning, you’re not only jeopardizing your personal property, but you’re putting your life at risk, too. And that’s not even mentioning the potential conflict and expense you’re leaving for your surviving family and friends to deal with. So if you’re childless, consider these three inconvenient truths before you decide to forego estate planning.