Were You Legally and Financially Prepared for the COVID-19 Outbreak?
Like many of you, I have been working from home over the last several weeks as a result of the COVID-19 outbreak. A few nights ago, I was watching a television show about businesses which were not prepared for the 2008 economic contraction and recession. The show also highlighted the 1918 pandemic, the 1929 stock market crash, and the 1987 stock market crash. Although the show highlighted business failures during those times, it also highlighted businesses which successfully pivoted to new financial realities, creating multimillion and billion-dollar businesses.
As a Family and a Business, Were You Legally and Financially Prepared for the COVID-19 Economic Contraction?
Many businesses and families are not legally or financially prepared for the current economic contraction. Over 6 million people in the United States applied for unemployment benefits. In addition, the market contracted by nearly 20%, restaurants are closed (except for delivery services), and other businesses shut down entirely as a result of executive orders issued by the governors of various states.
A recent study suggested that 74% of Americans live paycheck to paycheck, and 3 out of every 10 Americans have zero savings. Fewer than 10% of Americans could come up with $1,000 if an emergency arose.
Translation: Many Americans are constantly living on the edge and one emergency could bankrupt them. The same could apply for many businesses today, that did not survive the 2008 recession because they were living so close to the edge and were not prepared.
What Does it Mean to be Financially and Legally Prepared?
As a small business, you should ask yourself the following questions about your legal preparedness:
• Is your business structured correctly from a tax perspective for an economic downturn?
• Are your corporate records up to date?
• Are your vendor and employee contracts up to date?
• Have you protected your intellectual property with the proper copyrights, trademarks, and agreements?
• Are your trade secrets appropriately protected?
• Have your employee handbooks been updated?
• Have you conducted a comprehensive tax plan to ensure that your business is not paying unnecessary taxes?
• Is your business structured appropriately for asset protection to ensure that lawsuits do not destroy your business?
As it comes to your family, ask yourself the following questions:
• Have you conducted a Comprehensive Tax Plan to ensure your family is not paying unnecessary taxes?
• If you have minor children, do you have your temporary and emergency guardians selected with the proper and correct legal documents?
• Have you updated your estate plan with wills, trusts, powers of attorney, and advanced healthcare directives?
• Have you structured your estate plan correctly so that your children do not receive their inheritance all at once leading to loss from divorcing spouses, lawsuits, creditors, and other predators?
• Have you protected your IRA and other retirement accounts from loss when it transfers to your children and heirs?
• Are all of your legal and financial documents centrally located so that your family knows what to do in the event of your death?
• Have you purchased sufficient life insurance and is it structured appropriately as the death benefits transfer to your spouse and children?
As we move through this time of the COVID-19 outbreak and the ensuing economic repercussions, we cannot help but think about being legally and financially prepared for the next economic contraction. This will probably not be the only one you will see in your lifetime. If you were not prepared for COVID-19, now is the time to get ready.
If you have questions regarding being legally and financially prepared for the next economic contraction, please contact our office at (513) 241-0400 or use our contact form to schedule a 60-minute telephone or video conference.
The attorneys at Aronoff, Rosen & Hunt, LPA are here to help you protect your family and your business!