Exclusive: Longevity and Business Insurance
Sep 2, 2021
— 5 minutes of reading that could open your eyes —
By: John Geva and Shlomi Hadar – Attorneys and Mediators
The first step toward eternal life is—you have to die
Chuck Palahniuk(from his book Fight Club)
We are just a few days away from the High Holidays of Tishrei, a time that can be used for self-examination. Accordingly, we found it appropriate at this time to raise several important points, based on many years of experience, for those who own a business—and also for those who are connected to and affected by the business’s stability (family members, spouses, partners, employees, and the like).
Upon a person’s death, what they leave behind is, seemingly, of no personal benefit to them; however, it may hold value for those who remain alive, among them a spouse, children, grandchildren, partners, and others.
In recent years, through accompanying many business owners and in events where businesses were left without control due to illness, accident, or, heaven forbid, the death of the owner, we identified a widespread failure among many businesspeople: even when they were supported by organizational consultants, personal assistants, and professional staff teams, future planning received little to no proper attention.
- 5 minutes of reading that can enlighten your eyes -
By: John Geva and Shlomi Hadar - Lawyers and Mediators
"The first step to eternal life is – you must die"
Chuck Palahniuk (from his book "Fight Club")
We are just a few days away from the Tishrei holidays, which can be used to conduct a home inspection, and therefore we have deemed it appropriate at this time to share a number of important things based on many years of experience for those who own a business and those who are connected and affected by the stability of the business (family members, spouses, partners, employees, etc.).
Upon a person's death, everything he left behind is seemingly of no personal benefit to him, however, it may have value for those who remain alive, including a spouse, children, grandchildren, partners, and more.
In recent years, and in the context of accompanying many business people, as well as in events where businesses were left without control due to illness, accident, or the untimely death of the owner, we have identified a widespread failure among many business people, in that even when they were accompanied by organizational consultants, personal assistants, and a professional team of employees, planning for the future hardly received the attention it deserved.
Upon closer examination, it often becomes clear that this stems from the illusion that nothing bad will happen ("It won't happen to me...") or because the urgent and the real push aside what may come true and come at an unexpected time.
This means that assets with considerable economic value become the subject of legal disputes, burdensome assets, and in other words – loss of economic value and emotional distress.
What every business owner must therefore ask himself from time to time, and certainly when personal circumstances change (birth of a child, grandchild, wedding, divorce, illness, debts, winning a monetary prize) is - how to preserve or create value for an existing asset in a state of indigence (inability to make decisions) or in the event of death ?
Situations of bankruptcy and death are events that cause discomfort when thought about, however, in both cases, the fate of the business is likely to be the same.
Unlike death, a person with a disability continues to live, and with life there are also costs, and sometimes the question of whether this is a disability also involves complex medical and legal considerations.
A thorough examination often reveals that this stems from the illusion that nothing bad will happen (“It won’t happen to me…”), or from the fact that what is urgent and tangible pushes aside what may materialize at an unexpected time in the future.
As a result, assets with significant economic value become the subject of legal disputes, turn into burdensome assets, and—in other words—lead to a loss of economic value and considerable distress.
What every business owner must therefore ask themselves from time to time, and certainly when personal circumstances change (the birth of a child or grandchild, marriage, divorce, illness, debts, or winning a monetary prize), is: how can one preserve or create value in an existing asset in a situation of incapacity (inability to make decisions) or upon death?
Situations of incapacity and death are events that cause discomfort when we think about them; however, in both cases the fate of the business is likely to be the same.
Unlike death, an incapacitated person continues to live, and with life come expenses; moreover, determining whether a situation indeed constitutes incapacity may involve complex medical and legal clarifications.
The incidence of disability at a young age is greater than the incidence of death at these ages. And let us remember – disability can also occur following an accident or illness, God forbid.
So, anyone who did not bother to ask themselves the appropriate questions in advance, and did not prepare in time, will no longer be able to correct their mistakes themselves, and the burden of doing so will fall on their family members and/or business partners.
For this reason, and due to the great importance of the matters, we saw fit to bring this matter to our readers' attention and provide them with a number of tools that are worth examining together.
One of the legal tools for managing risks and allowing a person to control their life and future in the event of incapacity is a durable power of attorney .
Until this legal instrument was created, the only way to act on behalf of a person who is incapable of making decisions regarding his or her body or property (called in legal parlance: "confidant") was by appointing a guardian, whose identity was approved by the court, without prior instructions from the trustee, without expression of the trustee's wishes, and without the ability to control what happens in the trustee's business and/or private property, and even his or her body (approval to perform surgeries, transfer to a nursing home, medical treatment that requires consent and signature, etc.).
Appointing a guardian (a long, expensive process subject to court and Ministry of Justice guidelines) sometimes leads to loss of property, business collapse (sometimes due to lengthy legal proceedings), and incorrect decision-making due to lack of familiarity with the business or its complexity. Such an appointment may also provoke disputes and lack of clarity among dependents, partners, and family members.
Drafting a durable power of attorney requires considerable skill and experience, which we usually perform with the involvement of an accountant who accompanies the client, consultants who accompany the business, key figures, a personal physician if the client has one, an insurance agent who coordinates the client's insurance products, and a host of other relevant factors, depending on the complexity of the matter and the client's lifestyle and desires.
This issue came up more than once in professional conversations with insurance agent Mr. Itzik Simon , whose familiarity with the construction industry has brought to light tragic cases in which advance preparation by the insured could have financially saved businesses and family members, whether through adequate insurance coverage or in combination with complementary legal solutions.
And let us emphasize - the execution of a power of attorney is conditional on the grantee understanding the meaning, goals, and results of granting a lasting power of attorney, and therefore this power of attorney must be executed when the person is of sound mind and through a lawyer authorized to handle this through special approval from the General Guardian at the Ministry of Justice.
A durable power of attorney is a necessary legal tool to provide a comprehensive solution to the risks expected in a situation of insolvency.
But sometimes that's not enough.
In various cases, adjustments must also be examined and made to the basic documents of corporations , to the details of authorized signatories, to obligations and agreements with banks and third parties, and a series of other actions that can be performed here and now, while examining their implications for cases such as bankruptcy or death.
Proper planning sometimes also requires an understanding of insurance and inheritance laws.
Thus, errors are often discovered in wills that were drawn up without taking into account insurance products and rights that override provisions in the will (such as irrevocable beneficiaries).
Wills, therefore, are a work of thought, which should not be taken lightly, especially when there are complex assets or businesses within the expected estate or family complexity.
Unfortunately, longevity cannot be guaranteed, but it is possible to act with appropriate professional guidance to allow for appropriate medical treatment in cases of incapacity and, in cases of incapacity or death, to also allow for business continuity under pre-planned guidelines and courses of action.
Now things depend on you. And with a Happy New Year, good health to you and your loved ones.
*** The contents of this article are not a substitute for legal advice.
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