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Business Planning
This service is intended
to assist companies and owners in planning for present and future
business.
Business
Continuation The
Problem: Following the death of a business owner, the remaining
owner(s) face serious decisions and few alternatives. Their own
business future may be in jeopardy. Surviving owner(s) face four
alternatives:
Accept Heirs into the Business |
Accept Outsiders into the Business |
Sell to Heirs
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Buy out Heirs
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Are any of these alternatives in your plan?
How do you fund for Key Person Indemnity?
Treat Loss as Current Expense |
Accumulate Fund to Cover Loss |
Purchase Life Insurance |
Will
profits at time needed be sufficient to absorb loss?
Dollars needed come from company funds.
Profits may be needed
to fund other growth projects.
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If
a key person dies soon, fund may be inadequate to cover loss.
Earnings on fund may be
subject to income tax.
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Cash available exactly when needed.
Money generally
received income tax free.*
May be less expensive
than building a fund.
Cash value is an asset
on balance sheet. |
Business
Valuation
Problems business owners may
face at death, disability or retirement include:
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- Paying
business debts
- Paying
personal debts, especially personal guarantees for the business
- Having
sufficient funds to pay estate taxes
- Leaving
behind a stable business
- Preserving
the value of business assets for heirs
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A Business
Valuation helps solve each of these problems.
Buy-Sell
Planning
A Buy/Sell agreement may
provide for the sale of the owner's business interest at death, disability or
retirement. It may...
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- Assure
the transfer of the business at a price and on terms acceptable
to all parties. A forced sale or liquidation can be
involved.
- Provide
liquidity. A disabled or retired owner can diversify investments
and generate income. At death, purchase money helps pay estate
taxes, and other debts and administration expenses.
- Maintain
control of the business. Heirs (such as the deceased's spouse)
will not take control, or conflict with the remaining owners'
objectives.
- Help
retain key employees. At death, disability or retirement of
owner, business will continue. Key employees hopefully will
remain employed and be better workers.
- Establish
value for estate taxes. If agreement properly drafted, IRS may
accept business value for estate tax purposes.
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We recommend that you consult
with your own tax or legal advisors for counsel about the concepts presented
in these materials. Neither the insurer nor your agent may give you
legal or tax advise.
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