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Showing posts with label death. Show all posts
Showing posts with label death. Show all posts

Thursday 3 November 2022

How to protect your sole proprietorship

  

How to protect your sole proprietorship ...

While your business may be thriving under your sole proprietorship, it is important to realise the consequences of having a business ownership tied to you individually, and how it may impact your family in the eventuality of your death. 

THERE are many ways in which middle-income Malaysians make their money; the most common is through a sole proprietorship business, which forms a major part of the business owner’s overall wealth value.

There are many upsides to owning a sole proprietorship – it is fairly easy to set up, the startup costs are low, you have full control over the business as you’re the sole boss and, of course, the main draw is that you keep all the profits you make.

However, a sole proprietorship also has its disadvantages. One of the major disadvantages is that there is no distinction between your private assets and business assets.

As such, there is unlimited liability for debts, which has a potential to eat into your personal wealth should you not take measures to manage your business well.

An aspect commonly overlooked is the need to protect or preserve the business value and continuity should something happen to the owner.

Therefore, while setting up a business may be a positive step to take to help bolster one’s income, there’s also the stark reality every sole proprietor would eventually face – their business will also be terminated should any unforeseen circumstances happen to the owner.

This can be especially daunting for the families of the sole proprietor, who may face immense difficulty in managing their finance and preventing the families’ wealth from being affected after the death.

The case of Leong

Let’s take the example of Leong, a sole proprietor of a successful accounting practice in Puchong with 15 non-professional staff.

Leong’s business was doing so well that even with overhead costs of RM80,000 a month, he could easily draw RM45,000 per month from his practice.

Due to his lucrative business, Leong’s wife stopped working to spend more quality time with their children. One day, Leong met a fatal road accident and passed away. And with his sudden death, came a financial crisis to his family.

Clients who were once close acquaintances of Leong’s practice switched to competitors who offered the same services. Leong’s wife, not a qualified accountant, was unable to pick up her late husband’s business to continue offering these services.

Eventually, the business was forced to wind down as the dwindling income was not able to pay off the company’s overheads.

Since Leong was the sole breadwinner for the family, having no business income meant having no income for the family to survive off. His personal savings was only able to last the family 11 more months without any further influx of income.

As grim as this recollection sounds, it actually happens a lot more often than one might guess.

The question is – how do we avoid such situations for ourselves and our families? What could Leong have done to avoid this financial tragedy befalling his family?

First, let’s see some of the options that are available to Leong’s wife in such a circumstance.

> Liquidation of business by estate administrator.

Unless authorised by the will or court order, the administrator or executor must wind up and liquidate the business as soon as possible. Forced liquidation usually results in severe loss of business value, sometimes ranging as much as 40% to 90%.

> The estate administrator or executor continues the business until it can be sold as going concern.

In this alternative, the sole proprietor’s will gives the power to the administrator or executor to continue the business and exempt him from personal liabilities for the appropriate actions taken during this period.

However, the administrator or executor may still be liable for any losses caused by his or her negligence or imprudence.

Inexperienced administrator

The risk here is that, the administrator or executor may not be experienced or familiar enough to run the business operation.

Secondly, after settling the outstanding estate liabilities, administration expense and taxes, the administrator or executor may not have sufficient working capital to continue the business.

> The heirs inherit the business through a will.

In the sole proprietor’s will, the business can be transferred to the heirs as a gift. However, the heirs may not have sufficient knowledge or ability to run the business profitably.

If they are not successful in running the business, there’s the risk of dissipating their other estate inheritance in order to save the business. As such, the business gift may turn out to be a liability rather than an asset for the heirs.

> Sale of the business through as agreement prior to the death of the sole proprietor.

Before his death, the sole proprietor may offer the sale of his business to his employee or an interested outsider.

Under this alternative, the potential buyer enters into a contractual agreement with the sole proprietor so that the sole proprietor binds his estate to sell and the buyer to buy the business at an agreed price.

Now let’s take a look at some actions that sole proprietors can do while they are living to ensure that their surviving family members are not put into a tough position financially.

> Get a proper business valuation assessment as part of your estate planning.

As sole proprietorship is the trickiest to sell, it is important to have a licensed financial planner to help assess the business value.

He or she would be able to highlight the probable shrinkage in its value under different circumstances, and prevent the sole proprietor from overvaluing their business and thus under preparing the cashflow needed upon death.

Power to executor

> Give the executor of your will the decision-making power to continue or sell the business.

Without this instruction, the executor is bound by law to protect the assets in the estate, and thus may default to winding up the business as soon as possible, which could result in losses.

If the heirs are interested to continue the business, owners of the sole proprietorship may want to instruct the executor to transfer the business to them.

> Seek out a buy-sell agreement with friends or network in the field.

For some professional practices like accountant, doctors, land surveyors, architects, consulting engineers and others, a good practice would be for the sole proprietor to reach out to friends or network in the same field to enter into a buy-sell agreement as an alternative.

Such an agreement will ensure that the surviving professional will purchase over the practices from the deceased’s estate.

An agreement like this would not only help one, but both sole proprietors to ensure the continuity of the business in the event of one of the owner’s demise.

> Identify key employees who can succeed the business.

Depending on the nature of your business, you may want to invest some effort into identifying a potential successor and prepare them to take over the business one day.

Involve any prospective successor in the day-to-day operations to give him or her more experience. You could also consider entering into a buy-sell agreement with the potential successor to buy your business in the event of your death.

> Protect your family with life insurance.

This solution acts as a buffer to provide a safety net to your family. Protecting your family with life insurance while you’re still alive could help bolster losses incurred from a forced wind up of the business.

Forced liquidation

In some cases, the forced liquidation could result in liabilities in excess, of which the life insurance coverage will be able to compensate the business value loss.

In the case that your business does not go through a force winding up, the life insurance claim proceeds will buy your family time to transition through settling your estate, learning the ropes of your business, and/or provide your family accessible working capital during the transition period of settling your estate.

In the case of entering a buy-sell agreement with an interested buyer, he or she can consider purchasing life insurance on the life of the sole proprietor.

This may sound crude and calculated but when the time comes, it can provide additional funds needed for the purchase of the business.

While your business may be thriving under your sole proprietorship, it is important to realise the consequences of having a business ownership tied to you individually, and how it may impact your family in the eventuality of your death.

If you are a sole proprietor, I invite you to evaluate your risks while things are going well with your business. The best way to do this is to employ the expertise of a licensed financial planner.

The licensed financial planner would be able to help identify the pros and cons of each alternative to your business and incorporate your intended wishes into your comprehensive financial planning.

Yap Ming Hui is a licensed financial planner. The views expressed here are the writer’s own. Any reliance you place on the information shared  is therefore strictly at your own risk.

The Star - StarBiz By YAP MING HUI 

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Monday 15 February 2021

Choosing a good executor for your will

“It is a certainty but the Asian culture fails to talk about death adequately. Many times, the parents don’t really talk about this to their children. Such as, when a parent passes away, who will be in charge of the family’s business, ” Rockwills Advisory Services Sdn Bhd’s general manager and associate estate planning practitioner ason Tham told StarBiz.

 

DEATH is an issue nobody likes to talk about, but it is a certainty in this life.

This is likely due to the Asian culture where death is a rarely or openly discussed subject among families which could lead to complications later on for the loved ones.

“It is a certainty but the Asian culture fails to talk about death adequately. Many times, the parents don’t really talk about this to their children. Such as, when a parent passes away, who will be in charge of the family’s business, ” Rockwills Advisory Services Sdn Bhd’s general manager and associate estate planning practitioner Jason Tham told StarBiz.

“Many times, the children are also helping out in the family business and as the founder and business owner it is difficult for the parents to say that they are their children’s boss and parent at the same time. While in some other instances, siblings may be unhappy if parents outrightly choose one over the other to take over the family business.

"A lot of people have an inkling that this is an important topic to talk about but they don’t know where to start, ” Tham added.

He noted that recent business trends for Rockwills have indicated that awareness among Malaysians on the importance of writing a will have been on the rise as business volume in this area have grown.

Writing one’s will in advance will also help ease the transition for a person’s loved ones in terms of matters pertaining to inheritance.

Other than the importance of being more open in discussing death, Tham said it is important for a person to choose a good executor for the will.

“The executor will be acting on a person’s (demised) will. So appointing a capable executor is a very important task and a common mistake made by many is to overlook this part of choosing a capable executor. Some of the characteristics to look out for in a capable executor is that the person must be reliable and trustworthy, ” Tham said.

“Some good examples of a good executor can be a person’s spouse. Since this is a person whom you can trust and this person would know and can execute your wishes in regards to inheritance.

“We must also know that this person chosen will continue to be in existence, ” he added.

Tham explained that continuing to be in existence generally means that as a general guideline, one should try not to appoint their parents as their will executors.

“Most likely a person’s parents would be much older and the chances of them continuing to be in existence would be lower.

“If there are no untoward or unexpected incidences, most likely your parents will pass away before you. An executor will execute a person’s will when a person is gone, ” he said.

Tham said usually, a family member will be selected as executors and they are usually candidates that would naturally be a priority.

“In some cases, a person might require a neutral body to execute a person’s will and this is when a professional estate planning firm may come in handy, ” he said.

“One example when this may be applicable is when a father would like to give his inheritance to his children but they are not on good terms with each other.

“So it is very difficult for the client to appoint one of them to be executors since they would likely be biased and it can create more fights among them. So this is when a licensed trustee is useful to carry out the demised’s will wishes, ” Tham said.

A licensed trustee can also help carry out a person’s wishes in the event that both parents are not around with minors or offsprings who are not yet considered adults, he said.

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Thursday 22 September 2016

New ways to beat superbugs, a Malaysian doctorate student discovered?


A Malaysian doctorate student is causing a buzz in the medical research field.

 Lam Shu Jie (pic), 25, and her team of researchers may have found a solution to the antibiotic-resistant bacteria commonly known as “superbugs”.

The team from Melbourne School of Engineering published a paper on Monday on a new treatment method.

Shu Lam A 25 year-old Melbourne Uni student has made a discovery that could be a game-changer for modern medicine and avert a serious health crisis.

The method uses star-shaped structures called structurally nano-engineered anti-microbial peptide polymers (SNAPPs).

SNAPPs are found to be highly effective in killing Gram-negative bacteria – a class of bacteria which is antibiotic resistant – without hurting healthy cells, according to the team’s article in Nature Microbiology.

Unlike antibiotics which attempt to kill the bugs chemically, the star-shaped protein molecules defeat them by “ripping apart their cell walls”.

She also found that it was important to have outside interest due to the research work's long hours and possibility of failure..

"I've just watched the Korean movie called 'Train to Busan'. I also like trying new cuisines and exploring cafes here because the food culture's very strong," she laughed..

She lamented that the initial experiments were daunting, which left her in fear..

"My experiments kept failing, but later I learned what went wrong. I like the investigating part of research. It's beyond being in the labs or reading books; it's also about speaking with other experts," she said..

The second child of three siblings still has strong ties with home..

"I try to come back for the Chinese New Year because I miss my family," she said while lamenting the loss of her father last year..

Despite her supervisor Prof. Greg Qiao reportedly saying that her research is still at its early stage, Lam has plans to continue her research in the field, while in the long-term, she expressed hope to establish a research group with experts upon returning home and also lecture..

She will complete her PhD in two months time..

The scientific breakthrough was picked up by many news portals including Science Daily, the Australian Broadcasting Corporation and the South China Morning Post.

Lam told South China Morning Post that she spent the past three and a half years researching polymers and how they can be used to kill antibiotic-resistant bacteria.

The Batu Pahat lass, who is to submit her PhD thesis in two months, admitted that she hoped to continue to work in research, rather than opt for medical training like her father who is a paediatrician.

“I think my career will be mainly focused on research in the medical field,” said Lam.

Her supervisor Prof Greg Qiao, who is also one of the 10 co-authors of the scientific journal, said the research was still in its early stages.

He told South China Morning Post that more work was needed to verify the best formula and structure, as well as determine dosage and test for toxicity, before the substance could be deemed safe for human use.

“Even with all the money in the world, it would take at least five years to get to the first human-test stage because many resources and much work are needed before commercialisation,” he said.

Superbugs stem from misuse or overuse of antibiotics, according to the World Health Organisation.

It lists anti-microbial resistance as a global concern that threatens our ability to treat common infectious diseases, resulting in prolonged illness, disability and death. The Star/Asia News Network.

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www.scmp.com › This Week in Asia › Society
South China Morning Post
6 days ago - South China Morning Post .... The World Health Organisation lists superbugs as a key threat to human ... I have developed an interest in food and really like exploring new cafes ... Lam moved to Australia for her foundation studies after finishing .... Peter Wong says tougher banking regulation is on the way.

“I think my career will be mainly focused on research in the medical field,” said Lam, who has already begun pursuing her passion in polymer research during her four-year undergraduate degree in chemical and biomolecular engineering.

“As an undergraduate, she would come to our group for summer work when she had time,” Qiao recalled of Lam.


These days when Lam finds the rare downtime between researching polymers, she likes to watch TV and explore the city. “Being in Melbourne, I have developed an interest in food and really like exploring new cafes and brunch places, so I spend a lot of time trying new food and walking around when I’m not working,” Lam said.

Lam moved to Australia for her foundation studies after finishing primary and secondary school in Malaysia, and is likely stay on in Australia after graduating at the end of the year.

“My main preference would be to continue to stay in research, but I am also looking at career fields outside of polymer research,” she said. “This research is going in different directions,” said Qiao. “One is killing the bug, the other is treating cancer.”

Her group is also examining the use of polymers as a drug carrier for cancer patients as well as the treatment of other diseases.

A key project at the moment is the synthetic transplant of cornea in the eye, which involves the use of polymers grown from the patient’s own cells in the lab to replace the damaged cornea.
The operation has already been tested multiple times successfully on sheep, and Qiao hopes to begin the first human trials in Melbourne within two years, working with the Melbourne Eye and Ear Hospital.


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May 6, 2014 ... ... Bacteria , hand hygiene , Health , health and wealth , Hepatitis , Immunity , Medicare , medicines , MRSA , superbugs , Vaccines , WHO ...
 

Thursday 28 July 2016

Moneylender, Kandasamy, gunned down in broad daylight in Kuala Lumpur



https://youtu.be/Enj0F4ey1Hs


KUALA LUMPUR: A 43-year-old moneylender was killed after he was shot at some 16 times near Setapak Central here.

The father of three, who was on his way to meet a relative nearby, was driving alone near a mall when four men on two motorcycles approached his car at 3.55pm yesterday.

“They came when the victim’s car was at the traffic lights. One shooter went to the left and another to the right before both opened fire,” City CID chief Senior Asst Comm Rusdi Mohd Isa told a press conference at the Setapak police station yesterday.

SAC Rusdi said that the shooter on the right fired about three to four shots whereas the other fired twelve and the four men fled shortly after.

“Family members of the victim have confirmed his identity,” said SAC Rusdi, adding that the police would withhold his identity from the press for now.

On whether the shooting might have been gang-related, he said that there is a possibility.

“We have early information on his background of being involved in gangs,” said SAC Rusdi.

A post-mortem would be conducted, he said.

Wangsa Maju OCPD Supt Mohamad Roy Suhaimi Sarif asked members of the public who were present at the time of the shooting to come forward to relay any information they might have on the murder.

A video of what appears to be CCTV footage, which depicts the above chain of events, has been circulating on social media. -  The Star/Asia News Network

Moneylender executed at traffic light


Police examine the victim's vehicle with evident bullet holes on the driver's side.

KUALA LUMPUR: A 43-year-old man was killed in a hail of bullets after two gunmen opened fire at a traffic light intersection near the KL Festival City Mall at Setapak Sentral in yet another killing involving firearms in the Klang Valley.

The victim, who was a moneylender and suffered at least 10 gunshots, was driving alone in a heavily-tinted Honda Accord when he was attacked at 3.35pm.

He had stopped at the traffic lights and was on his way to have a drink at the mall nearby when four men on two motorcycles arrived seconds later and pulled over next to his car.

Police said the pillion riders, both who were armed with pistols, got off the motorbikes before each of them went up to the driver's and the front passenger's sides and opened fire, killing the victim on the spot.

The gunmen who are believed to be hired killers fled with their accomplices soon after and investigators believe the attack is linked to a turf war between underworld gangs.

Kuala Lumpur police chief Commissioner Datuk Amar Singh Ishar Singh said based on the spent 9mm bullet casings found at the scene, the gunmen fired 18 gunshots.

He said investigators have a street close-circuit camera recording which showed the attack taking place.

Police are also checking if the case is linked to another murder case in Jinjang in January where a 41-year-old contractor died of three gunshot wounds to his face and chest during a meeting with two men near a factory.

Meanwhile, a family member of the victim who was interviewed by theSun said the man had been in hiding for several months because he knew that he was wanted by underworld members and that his life was in danger.

The family member, who declined to be identified, said he heard about the news of the shooting when the viral picture of the victim was sent to him via WhatsApp from a friend.

"At first I did not believe that the victim was my relative, he had shaved his head, probably because he's been in hiding," he said.

He said the victim had been involved in underworld activities since he was 25.

By Charles Ramendran and Aiezat Fadzell newsdesk@thesundaily.com


IGP: Setapak killers still in the country


By By Justin Zack The Star/Asia News Network



KUALA LUMPUR: The suspects in Wednesday’s fatal shooting at Se­tapak are still in Malaysia, accor­ding to the Inspector-General of Police.

“We believe that they still are here,” said Tan Sri Khalid Abu Bakar when met by the media after launching KPD Mart Community at Kolej Unikop here yesterday.

On whether the latest shooting pointed to a trend of using hired killers, Khalid said the police did not see it as such.

“We don’t see this as a trend of (using) hired killers but I do not deny that we have these cases.

“These are not random shootings. All these cases had a reason behind the shootings, including the latest shooting,” he said.

Police, Khalid added, would be taking more steps to “minimise” such incidents.

kanna setapak shooting victim While no arrests have been made yet, the police assure the public that the force “will hunt them down” and that the suspects “cannot run”.

Moneylender V. Kandasamy (pic), 43, was shot dead at a traffic light near Setapak Central when four men on two motorcycles fired a total of 16 shots at him while he was still in his car.

City police chief Comm Datuk Amar Singh, when contacted yes­terday, confirmed that the victim was a member of the “Satu Hati” gang.