What If I Die? How will my investors be protected? What about my family?

A reader of my blog recently asked me this question. It seems an investor is concerned that, should this producer die before or during production, the project (in this case, a stage play) would fall apart and the investment would be lost. The question resonated for me because the entertainment industry news has recently carried stories of several prominent producers who’ve died rather unexpectedly.

Successors

My initial answer to the reader is this: The producer’s successors would (in most cases) have the continuing right (and likely the obligation) to produce the project.

Heirs and Administrators

If there’s no business entity in place, and we’re dealing with a solo producer, this right and obligation would fall to his or her estate, the executor and, eventually heirs of the deceased producer.

Typically, however, after the death of a loved one, the heirs are caught up in the process of grieving, and reorganizing their lives to go on without spouse, parent or child. These folks are rarely able to effectively operate the deceased person’s business, and even if they were technically able to do so, it’s unlikely they’d be proficient at it. So investors would be justifiably concerned.

In such a situation, the wisest course of action would be for the estate to appoint a producing professional to take things over. This person might already be in place with the production as it’s General Manager or as an associate producer, etc., but if not, hiring someone to step in makes good sense.

Business Organization as successor

If there’s a business entity (like a Limited Liability Company or Limited Partnership) in place for the production, that organization would (probably) have the continuing right and obligation. For this reason, it’s wise during the entity formation stage of things to consider and plan for succession, so the business can continue after the death of the principal. Although this is a greater concern when the business has a single person at its nerve center, but even where the company has multiple principals, the death of a principal can throw things into disarray.

Insurance

As I continued to think about the question, my thoughts kept returning to the idea of insurance.

A simple, term life insurance policy could certainly provide for the investors' money to be returned in the event of a principal’s death.

But death isn’t really the only concern. In fact, as a business owner myself, and because I bear responsibility to provide for my family as well as those I work with, I’m actually a bit more concerned about a lengthy illness or injury that makes me unable to work. Independent producers likely have similar concerns.

It’s certainly possible for a business to hold “key person” insurance to protect against losses that will be suffered should death or disability render an important person unavailable. Such insurance isn’t cheap, but it’s probably wise to evaluate the potential impact losing access to the ideas, experience and connections of a principal would have on the project. If (after putting ego aside for a moment) you conclude that the project would fail in your absence, then planning for the expense of key person or appropriate business-interruption coverage as part of a project’s budget might make sense.

Planning is really the key

In my law practice, I work with lots of entertainment businesses. Unfortunately, for start-ups and established business entities, planning for the unpleasant eventualities is the exception, rather than the rule.

But let’s face it, bad things sometimes happen. As unpleasant as it is to think about illness, injury, death and dying, it’s far worse for those left picking up the pieces in the aftermath of such an event. Planning for these kinds of events is the mature, responsible thing to do.

Let me be a resource

The help of an experienced attorney is crucial in such planning. I can help you organize and plan for the continuation of your projects and business ventures, and to protect your family, business associates and investors from the consequences of unexpected life events.

Now, I want to be clear, I’m not an estate planning attorney. I won’t be able to draw up your will or draft a trust for your family, but I do know some really good lawyers who can do this for you. I’m always glad to be a resource. I’m here to help. Contact me when you’re ready to start planning. It’s worth the time. Won’t you sleep just a little bit better knowing you’ve taken care of things?