Preparing for Emergencies on a Personal Level

March 03, 2022

By Joseph Rubin and Matthew Kerzner

Most people don’t like to think about preparing for emergencies, especially if that emergency results in their death. Estate planning and writing a will are difficult processes; they involve complicated legal and tax considerations as well as the equitable and appropriate distribution of assets and, clearly, such preparations are laden with emotion. However, adequate emergency preparedness can take some of the burden off loved ones. And if you own a family business, proper planning can ease management transition and mitigate the risk of business interruptions. For real estate family businesses, where the personal ownership of the assets and the running of the business are particularly intertwined, thorough planning takes on greater urgency.

Simpler than writing a will or setting up trusts is the creation of a desk plan, a file you create for close family members and business associates in the event of an emergency. The desk plan is a road map to the information and documents your heirs, business colleagues and advisors will need during and beyond the period of crisis. For example, does anyone know the password needed to open your computer, who to call if anything happens to you, or where you keep your will? As an owner of a real estate business, have you provided a list of deals in progress, the management company succession plan, or a schedule of authorized signatories on the company’s bank accounts?

The first step is making a list of all the information your family needs to know, as well as what you would want to know if you were taking over from someone else and suddenly running the family business. You probably have most of this information in your head; the goal is to create a user-friendly summary that is easily accessible in an emergency. To create a successful desk plan, the information needs to be current, so the desk plan should be refreshed once or twice a year. Once the information is gathered and current it must be well organized and accessible. That doesn’t necessarily mean you should gather all critical documents in one place (a task that, while helpful, may be impractical). Instead, the desk plan should indicate where the documents are kept and with whom – lawyers, accountants, business associates, etc.

Creating a complete desk plan will take some time, partly to figure out what it should contain. There are several broad categories of information to consider, each with numerous possible sub-sets depending on a person’s activities and holdings. For example, a simple desk plan could be organized as follows:

  • Personal – passwords, contact lists, residence and vehicle documentation, tax returns
  • Estate planning documents – will and trust agreements, life insurance policies
  • Financial investments – brokerage accounts, bank accounts, alternative investments
  • Real estate investments – schedule of properties, operating agreements, co-investors
  • Management company – succession plan, financial statements, management agreements

A more thorough desk plan would provide the recipient with far more information and how to access the related documents. (To assess whether you have the information to create an effective desk plan, complete the attached tool designed specifically for owners of real estate family businesses). The tool lists additional categories of information and asks whether the information in each category is current, organized, and accessible to the people who will need it in an emergency. If the total of all the columns is greater than 125, you are ready to create a highly effective desk plan. If your total is less than 125, there is work to be done before a desk plan can be compiled. For example, you might have all your property financial statements well organized on your computer, but haven’t created a list of properties so that the user knows which financial statements to look for, or described where on your computer filing system those financials are stored. Please reach out to your planning advisors for assistance in developing a highly effective, customized desk plan that will ease the burden of family members and business colleagues in times of distress.

About Joseph Rubin

Joseph Rubin has experience working with real estate transactions, governance and reporting and distressed debt restructuring.

About Matthew Kerzner

Matthew Kerzner is a Managing Director in the Center for Individual and Organizational Performance and the Center for Family Business Excellence. Matt has more than 25 years of experience in organizational development with a specialization in assisting family businesses and closely held businesses.

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