What We Didn't Plan For
It all started with a cough. That dry, hacking, persistent cough you typically associate with smokers. He'd had the same cough the winter before, but the medication had made it disappear quickly. We figured it was just another bout of bronchitis.
Alas, we were wrong, as a chest X-ray he had soon thereafter sadly revealed. My 49-year-old husband, John Petrarca, had somehow gotten lung cancer, and by the time it was discovered, it had already spread to his brain and his bones. He had skipped right ahead to what the cancer world calls Stage IV, the last stop. It was like going from a standstill to 100 miles an hour in three seconds.
He was the one who was always healthy. Whenever our kids came home with colds or the flu, I was the one who succumbed. John never smoked, didn't abuse his body with drugs or alcohol, had no known exposure to asbestos, and grew up in a huge Italian family that was cancer-free. If he could get sick, in other words, no one is immune.
In addition to being a husband and a father, John ran his own business. He was a highly acclaimed architect based in lower Manhattan. For the past 10 years, he'd had a partner and they'd expanded their successful practice to more than 30 employees, working with clients as far-ranging as MTV, Columbia-Presbyterian Medical Center, and media executive Geraldine Laybourne. But about six months before he was diagnosed, John decided he wanted to shrink back down to a staff of 10 and focus solely on developing urban townhouses. It was the kind of design challenge that made him the happiest, and he hoped that acting as a principal would prove more lucrative than his fee-based architectural practice. I was excited to see him so energized by his new business concept. Although I was only working part-time as an editor, I was not particularly worried about the financial risk it implied because I figured it couldn't be any worse than the uneven and modest stream of fee-based income that has always plagued the business of architecture.
John and his partner, Robin Guenther, set April 1, 2001, as the first day of their new, separate businesses. The date of the X-ray revealing the mass on his lung: March 30.
The first oncologist to interpret John's scans was brutally frank in his assessment, prodded on to some degree by my husband's insistent questioning. John wanted to know exactly what he was up against, and the answers given by Dr. John Cho of St. Vincent's Comprehensive Cancer Center were not encouraging. There was no cure. At best, John could hope to live 12 more months, but statistically, it was more likely closer to six. Treatment could delay the inevitable, but it would be uncomfortable. In a report he sent later to John's pulmonologist, Dr. Cho wrote, "I thank you very much for the opportunity of evaluating this pleasant but unfortunate gentleman."
We stumbled out of his office onto the street in absolute shock. In a taxi heading home, we both began to sob. We asked the taxi driver to let us out a few blocks early so we could sit on a park bench, look out over the Hudson River, and try to collect ourselves before going home to relieve the babysitter of the care of our two unsuspecting children, ages six and eight.
For several weeks, we told no one, trying to absorb the life-altering news, trying to figure out what to do about his new business venture, what to communicate to his employees, his family, our children. The news was impossible to fathom. John had been my partner in life since I was 24 years old. A wildly creative, driven man, he had always been there to challenge, counsel, and entertain me. He was an incredible father to our children, spending hours with them cross-legged on the floor building exotic structures out of Lego blocks, telling tall bedtime tales, teaching them how to use mind-blowing software. I couldn't imagine life without him. It took an act of supreme deception to make it through those first days without betraying the depths of our despair.
When an employee of a midsize or large business gets this kind of shocking news, there is at least some institutional backbone upon which to lean. A sick employee's workload can be divided up among others, giving that person time to address his or her personal crisis without worrying about work obligations. Many large companies also provide some measure of financial support in the form of health insurance, life insurance, even disability insurance. And they frequently offer some kind of plan, such as a 401(k), to stimulate retirement savings. The body blows, both emotional and financial, in other words, can be absorbed, to some degree, by the business at large.
When the owner or CEO of a small business gets sick, the financial impact is more immediate and far-reaching, both to the business and to the family. Cash flow, already often unstable, becomes unpredictable in the extreme. If there are no partners in the business, there is frequently no one senior enough to serve as a stand-in, so a health crisis can cause the entire business to be set adrift at the very moment a financial cushion is most needed. As for insurance and pension plans, they are often viewed as luxuries that cannot be afforded.
In John's case, having just severed his ties with his partner, he decided his only hope was to open himself up to his employees. He needed to have his brain tumor treated immediately with a high-tech form of targeted radiation that would leave scars on his skull and require him to be out of the office for several days. It was time to explain why there were so many mysterious doctors' appointments on his open-to-all online calendar. "We'd all been worried. He seemed tight-lipped, and he wasn't usually," said Elizabeth Houck, then his secretary. "He was going to the doctor a lot."
John called everyone into his small conference room one afternoon in May 2001 and laid it all out. "He wasn't emotional -- he was very to the point," recalls John Dooley, who had been working for my husband for three years. "He said he had cancer and that they had given him six months to live. Everyone was crying, but not him. No one had suspected anything that dire."
John's instinct was to close down his firm, Studiopetrarca, as quickly as he could. On top of everything else, our family was in the middle of moving into a new house he had designed and built for us, and he was worried about getting it completed before he died. Plus, he thought that since the business was so new, it would be a relatively simple matter to shut it down. Architecture is a long, slow process. Projects can take years to complete. No client, he figured, would ever hire him once it was known that he was terminally ill. And he felt it would be impossible not to disclose his condition, especially since he expected his physical appearance to deteriorate quickly. He had hoped to do some real estate development work himself, but how could he ever persuade a bank to finance any of his projects? The whole idea of continuing seemed hopeless. He began to make plans for setting up a desk next to mine in our new study and working as a consultant for as long as his health held out.
A conversation with one of his employees, Suzanne Henry, led him to change his mind. Suzanne's mother had been diagnosed with ovarian cancer in 1995. Although she had initially put her life on hold, a bevy of experimental treatments had allowed her to remain active and to continue working. Seven years later, she was still going strong. John was inspired by Suzanne's story. Fighting to overcome long odds was more his style anyway. He resolved to keep his business going as long as he could. "John needed to work," said one of his architects, Roberta Woelfling. "He would have been miserable and probably died sooner. That was what motivated him."
But how do you run a business when you are terminally ill? How do your employees deal with your good and your bad days? How do you get new clients and financing? And how do you plan, at the same time, for your inevitable demise?
Obviously, everyone responds differently to adversity. Our responses are shaped by our personalities, our experiences, our philosophies of life. John's approach was to face his illness head-on, and, as trite as it sounds, to make the best of it. It was how he had always dealt with other, less critical disasters: construction plans that went awry, clients enraged by over-budget renovations, cash-flow crises. He was always unflappable, seemingly unperturbed whenever he found himself on the knife edge of defeat. It was no different with his health.
Instead of letting it depress or isolate him, he engaged with the disease, systematically researching it so he came to know his enemy, and then reveling every time he deprived it of further advancement. As an architect, he had always seen technology as his ally, insisting on incorporating all the latest products, materials, or construction techniques into his projects. When his doctors recommended cutting-edge treatments, he couldn't wait to comply, regaling anyone who would listen with his macabre tales.
Taking him for stereotactic brain surgery, for instance, filled me with dread. The contraption that was literally screwed into his head seemed barbaric; it was all I could do not to throw up. He, however, loved seeing all the sci-fi-like equipment, the doctors plotting three-dimensional pathways of 201 beams of radiation on their computers, beams that would fry his tumors into oblivion. It was all great fodder for stories.
You might think this would be the last thing an employee would want to hear about, but John's staffers tell me that his openness was actually reassuring. "He shared the whole process with us," says Roberta. "The communication made it easier for us. There wasn't any secrecy." I asked them recently how they survived those difficult days and their answers were pretty uniform. They loved working with John. They thought he was one of the more interesting, talented bosses they could hope to have, and no matter how trying the circumstances, they figured the time working with him was well spent. John Dooley came under heavy pressure from his then-girlfriend to look for a job at a firm with a more promising future. "We had horrible arguments at the time," he recalls. "She was adamant about me leaving as soon as possible." Dooley decided to stay; an employee who received an attractive job offer did leave.
My husband was even able to attract a new employee, despite disclosing his illness in what must surely have been a bizarre job interview. "I remember trying to maintain my composure, trying to process what it meant for me and for John without reacting," says Jae Lee, who subsequently became John's assistant for legal, marketing, and administrative matters. "I certainly wasn't going to ask, 'Well, how long have you got?"
As odd as it may sound, his employees say that working for John after he learned he was ill was actually better than working for him before. "He started joking around more," says one.
As odd as it may sound, his employees say that working for John after he learned he was ill was actually better than working for him before. "John changed," says Roberta. "He got softer, more sympathetic." John Dooley says his boss went from being somewhat stern and reserved to being quite talkative. "He started joking around more, became more involved in chatting with people. He had a totally different perspective on life," he says.
My husband also learned to relinquish some control over his work, something he, like many entrepreneurs, had had trouble doing. Once he began to get chemotherapy three weeks out of four, he had no choice but to lean more heavily on his staff. While some were occasionally frustrated by his lack of direction, they also seemed to relish the additional responsibility.
John's relationship with the outside world was more complicated. Clients with whom he had had close personal ties stood by him. When real estate developer Robert A. Levine of RAL Companies first learned of John's illness, he begged John not to do anything rash like close the office and assured him of his continued support. The decision, he acknowledges, cost him time and money because John was sometimes inaccessible and didn't always follow through well on everything. Still, says Levine, "it was worth the risk, to have whatever part of that relationship I could have."
With those he knew less well, John made calculated decisions about how much to reveal. He occasionally used his disease as a club, writing plaintive collection letters, for instance, to wayward clients or seeking an excuse for a delayed payment to a creditor. With others, he strove to portray a vibrant picture of health. "He had a little fear about not letting the bank know," Jae recalls. "If they knew how sick he was, they wouldn't provide financing." He was convinced that his physical appearance was critical to how the outside world perceived him and was delighted when the doctors' predictions that he would lose his hair to chemo proved unfounded.
But the reality of architecture is such that few new projects materialized. Several months later he laid off one employee, then another, in order to stay in fiscal balance. He looked into declaring himself disabled to avail himself of some disability insurance his insurance agent, John Bartram, had thankfully cornered him into buying several years earlier. He quickly learned about an important nuance. His firm's health insurance policy contained a common provision that required you to be working at least 20 hours a week to remain eligible for coverage. Fortunately, John was. But he realized then that he and his doctors would have to document that he was disabled enough to get the disability payment without being so disabled that he would be dropped from his health insurance plan that covered not just him but our entire family. We looked at disability insurance with fresh eyes, grateful nonetheless for the $1,500 it provided each month.
Vaguely stable, John began to see what he could do to create work for himself. It had always been part of his strategy for the new firm to dabble in real estate development. With his added health complications, creating his own projects became an even greater imperative, and thanks to some capital that looked like it would be forthcoming from both family and professional contacts, he was able to do so.
He threw himself into his work with gusto. An experimental drug he began taking as part of a clinical trial miraculously began causing his tumors to shrink. We tried to relax and enjoy life a bit more as a family. I was on the cusp of getting a full-time teaching position at Baruch College, which offered the prospect of greater professional stimulation and some welcome security. We indulged ourselves with a week at an upscale ranch in Arizona, followed by a visit to the Grand Canyon, a family pilgrimage that now seemed more urgent to make. Twelve months after his initial diagnosis, John's cancer was deemed to be in enough of a remission that his chemo treatments were suspended. Still, we were afraid to celebrate, since his doctors warned that it would only be a matter of time before the cancer would return.
Sadly, they were right. In the fall of 2002, new brain tumors appeared, forcing John to undergo "whole brain" radiation and instantly turning him into a bald man. He began to lose weight. Around that same time, a doctor who specializes in experimental treatments recommended that he see Dr. Thomas Nesselhut in Duderstadt, Germany, who had been having success boosting cancer patients' immune systems. The treatment required him to be overseas about 10 days a month, an intense regimen that John nonetheless threw himself into valiantly.
Those last few months were the most difficult for his employees. He began needing oxygen and pulled a portable tank around the office behind him. "It was only toward the end, when he was so physically debilitated, that it started to take a toll," recalls Jae. Roberta agrees: "It was hard to watch someone's demise." The weaker he became, the more urgently he focused on winding the business down. His earlier decision to shift almost completely away from client work to his own development initiatives made that process easier. In March, he let go of most of his staff, helping them find other jobs, but kept two on as freelancers to help him wrap up loose ends. He also frantically began seeking a tenant to take over his office, which was in the same building as our home. John's firm had paid us rent, and he didn't want that income to be disrupted.
John made five trips to Germany and enjoyed one brief moment where the treatments seemed to stop the disease in its tracks. However, eight days after getting home from his last trip in May 2003, John passed away in our home, a spent force at age 51. Only hours earlier, we had taken down the Studiopetrarca sign hanging in front of our building, in anticipation of the new tenant, another architectural firm.
You would think that with all this time to anticipate the impact of his death on our family's finances, he and I would have done so adequately. After all, I am a business journalist, supposedly savvy in matters of personal finance. And this was not a case of someone being hit by a bus. John did, of course, have a will. We had taken that step after our first child was born in 1992. But his approach to retirement savings had been classically entrepreneurial. He hoped that his business would someday generate enough profit to support him in his old age, so he rarely put money aside. When he did save, his investment approach was as iconoclastic as his attitude toward building his business. As a designer, he was completely dependent on his long line of Apple computers, so, in true Peter Lynch-style, that was the stock he bought. At the time of his death, thanks in part to Apple's ups and downs, his completely undiversified IRA amounted to a mere $29,000.
As for life insurance, well, that was just a horrible case of bad timing. In anticipation of his new firm, John decided to increase his life insurance from the $200,000 he had previously purchased. The week that the nurse was scheduled to come to John's office to conduct her medical exam was the week that John was diagnosed. "If only we'd had that conversation three months earlier," says Bartram, of New York Life Insurance Co. "This is the thing you never want to have happen if you're an agent." Needless to say, John was not able to raise his coverage.
Still, I felt fortunate to have $200,000, figuring it would help pay those dreaded college tuition bills. That was before I began getting hit with surprises. The first one came about three days after John's death, before the funeral had even taken place. I was sitting in my living room with some of John's family talking in general terms about my financial situation, when my brother-in-law Dan turned to me and said, "Well, you do know about the lien on your house, don't you?"
A frantic search through my husband's papers turned up a folder filled with depressing documents, one of which indicated there was indeed a lien on our house.
I was horrified. What lien on the house? He said John had told him about it on a trip to Germany, and he thought it wasn't too big, maybe a couple hundred thousand dollars. A frantic search through my husband's papers turned up a folder filled with depressing documents, one of which indicated there was indeed a lien on the house from a contractor. Only it was a little more than Dan thought: $1.245 million, to be precise.
That was only the beginning. John's former partner contacted me before the funeral to explain why she had never responded to any of my e-mails depicting John's declining health. Turns out, she and John were locked in a dispute over some money she felt he owed her, and they hadn't spoken to one another in six months. I had been thinking of Robin as someone who might give one of the eulogies at the funeral. Now I feared she would press her claim against his estate, which appeared to be shrinking fast. (Thankfully, she never did.)
A few weeks after the funeral, a manila envelope about a half-an-inch thick arrived in the mail. Inside were copies of time sheets from a heating and air conditioning contractor who had done work on our house, accompanied by a bill for $50,011. John had never mentioned that the work he had commissioned would come to anywhere near that gargantuan amount. All I could think of was, there goes a quarter of his life insurance.
The surprises kept coming: Because John had refused to pay a water bill he was disputing, I received a letter indicating we were in technical default on our mortgage. At one point, Columbia-Presbyterian's accounting system went into overdrive and sent me 17 different bills on the same day claiming we owed them $24,907 for chemo and blood tests that the insurance company hadn't reimbursed them for. John's ex-partner's ex-landlord even tried to press a claim against his estate. It got to the point where I was afraid to look at the mail.
On the plus side of the ledger, Jae called one day to tell me that a lawyer my husband had retained was trying to reach me. It seems John had placed a $150,000 lien on a building for architectural fees he was never paid and it needed to be renewed to remain valid. Without that call I would have been totally unaware of the lien as a potential asset.
I know what you're thinking -- this could never happen to you. It sounds like such an extreme situation. Certainly, John's role as an architect, developing houses for clients as well as for us, meant that the lines between his business and his personal life were blurred. But blurring is common with small businesses. Many spouses of small-business owners will face the same issues I did because, unfortunately, the remains of the business are often all that masquerades as insurance and a pool of retirement money. Even if they rely on an estate attorney, they're going to want to know: What and where are the assets, and what should be done about the liabilities? Which bills deserve to be paid, and which ones are exaggerated or even bogus? Many small businesses lack accounting departments or full-time bookkeepers; many entrepreneurs keep the most important financial and legal details in their heads. In these ways, I do not believe my situation is unique at all.
Moreover, I don't believe that my husband was particularly irresponsible when it came to estate planning. He had insurance and an IRA, and he spent the last months of his life fighting with contractors to shore up the value of our new home. Although frustratingly illiquid, it is worth far more than any life insurance or retirement plan he would have signed up for. So I consider myself one of the luckier ones. Only 29% of employees in small businesses participate in retirement plans, for instance, compared with 58% for midsize and large companies, according to the Employee Benefit Research Institute, a Washington, D.C., think tank. "Most [entrepreneurs] are bootstrapping everything. They're so busy pouring cash back into the company it's one of those things they never get to," says Chris Hennessey, faculty director of the executive education program at Babson College in Wellesley, Mass. "They're so busy keeping customers happy they don't sit back and do a planning day."
As for those nasty surprises, I firmly believe that no matter how close you are to your spouse -- in our case, we were happily devoted to each other for 24 years -- there are probably things he or she won't speak about as the end comes near, assuming you have the luxury of time. I've spent many a sleepless night trying to figure out why my husband never discussed what, in hindsight, seem like crucial issues to me. He may have thought he would have time to resolve them; he may not have wanted to upset me any more than I was already; he may simply have become overwhelmed by his health problems. I'm often asked if I'm angry with him for these omissions, but how could I be? My husband suffered from a horrible disease, his professional dreams were extinguished at the most promising moment of his career, and he lost the chance to watch his incredible children grow up. Compared with those losses, an undisclosed lien, no matter how large, means nothing.
Moreover, whatever mistakes we made, we made them together. I didn't want to go near the dreaded subject of what happens afterward. It terrified me. I refused to discuss it, believing that to do so betrayed a hopelessness I was not ready to acknowledge. It would have been disloyal to his fight.
Discussing this with his attorney now, I know my ignorance about his business is not uncommon. "That's normal," says Alfred Goldfield, a senior partner at Balsam Felber & Goldfield in New York City. "Many wives don't want to know everything about the business." And of course, the secrets can extend far beyond one's business life. A friend of mine who is also a widow told me she found out at her husband's wake that he had been married not just once but twice before! No matter how successful your marriage is, don't assume you know everything.
In my case, at least, a small amount of forward planning could have saved me great anguish and might have minimized some financial blows. One tiny illustration: All of my husband's most important correspondence was on his laptop. But after he died I realized I didn't know his password. Through trial and error, I was eventually able to figure it out, but how simple it would have been for us to think of that beforehand.
Similarly, given the litigious nature of his business, it would have been great to know the names and phone numbers of the lawyers he had retained. His employees knew nothing about the lien. Only through extensive digging through his files and phoning around was I able to piece together the legal landscape. And then there were those two bank accounts he kept in England, where we had once lived, so that he could pay for British journals and professional fees in pounds. I only realized there were assets there when I got a letter a year after he died saying that they were about to become classified as abandoned property. "I've had estates with two dozen lawsuits and assets all over the world," says Goldfield, who recommends that his clients create a list of everything they have and where it is, and another that details the thorny issues that would need to be taken care of upon death, a list he himself makes and regularly updates.
By now you will have figured out that I am John's executrix (or female executor), responsible for overseeing the final closing down of his business and his estate. In many respects, these responsibilities were limited. While we were in Germany on his last trip, the two freelancers who remained with the business packed up everything that John hadn't directed them to throw out and moved the boxes into our basement, where they remain. One unpleasant duty I do recall was having to notify John's former staffers who were still on the firm's health insurance policy (including one who was pregnant) that I had no choice but to terminate their coverage. We negotiated a time frame that allowed them to transition to alternative plans, and they were all gracious in accepting the inevitable.
It was painful to get sucked into these complex matters immediately after John's death, when I was also trying to recover and take care of two sad and shaken children.
None of these administrative responsibilities was particularly fun, of course, but given the intimacy of my husband's small office, I'm not sure I would have felt comfortable having anyone else do it. Goldfield likes to tease me for being a control freak, and I accept his characterization. It certainly was painful to get sucked into all these complex matters immediately after John's death when I was also trying to recover and take care of two sad and shaken children. I learned after the fact that we could have established co-executors, where one person could have focused on the business and I on our personal affairs. However, our will was set up before his firm had expanded, before there were any real assets to protect. And we never seriously revisited it.
It would be a mistake for anyone to feel sorry for me. I am fortunate to have a great job, fantastic kids, a wonderful home, and many fine friends. I don't know yet how all the various surprises (including the lien) will be resolved because the legal system is so extraordinarily slow-moving, but I remain confident that we will emerge intact. And I have gained a greater appreciation of what's truly important.
My husband was, quite literally, a brilliant man. I have boxes full of letters from former clients, colleagues, and peers, all attesting to his inventiveness. As Gerry Laybourne says: "His ideas took your breath away." But the things that made him such a great entrepreneur and exciting life partner -- his optimism, his irreverence, his stubborn refusal to follow norms -- these same traits hurt him when he found himself facing a door that simply closed too fast.
Sidebar: How to Protect Yourself
When a family's personal finances are intertwined with those of a small business, the pain and disruption from the loss of a loved one can be especially trying. Herewith, some hard-earned suggestions:
If you don't have one, get one. If you do have one, revisit who you have chosen as your executor. If you've designated your spouse, discuss whether it's realistic to think he or she will be able to take on such a big responsibility immediately after your death. If you still choose your spouse and he or she isn't familiar with the business, consider appointing a co-executor who is.
Resist your natural instinct to save money and purchase an adequate life insurance policy. What's adequate? Financial planners have their own calculations, but from where I sit, it should be at least enough to cover five years of major expenses (mortgage, tuition, car payments, etc.) for those who are dependent on your income, whether they be a spouse, a child, or a parent.
It's relatively cheap and can really come in handy. But be aware that if you declare yourself fully disabled, you may be forced off your company's health insurance plan. You might end up having to purchase a more expensive individual health policy that could reduce or erase the value of the disability payment.
Don't assume that your equity in your business is a virtual pension plan. Your company may end up having little or no value when you retire, get sick, or die. Be disciplined about setting aside savings every year, and be sure to diversify your investments.
Everybody has them. Give your executor a list of the cases, the attorneys you are using, and their contact information. Update the list regularly.
Don't make your executor go in search. Keep an updated list of your major assets and liabilities and where they're located, so he or she has somewhere to start.
Make sure your executor knows which bank(s) you're using and what the account numbers are.
In an age where your most current and important information is likely to be found in a password-protected area of your computer, your executor needs to be able to gain access. Forget the safe-deposit-box key; give the executor a list of your computer, e-mail, and voice mail passwords. And importantly, update the list regularly.
Sarah Bartlett is the Bloomberg professor of business journalism at Baruch College in New York City. She is a former Inc. contributing editor.