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Business Planning

Business Planning2024-06-14T03:39:24+00:00

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Life insurance can play an important role in a business succession plan. Here are some techniques and strategies commonly implemented in business succession planning. Don’t worry if they sound confusing, we can walk you through them and help you choose the best tool for your business now or in the future.

Estate Liquidity: Some business owners will wait until death to transfer all or most of their business interests to their children or beneficiary. If the business owner has a taxable estate, this can be a huge hardship for the beneficiaries. However, life insurance can provide beneficiaries with cash they will need to pay the estate taxes.

Estate Equalization: A business owner can use life insurance to provide children who are not involved in the business with an equal inheritance. Here’s how it works. The business can be left to the active children, and life insurance (owned by an irrevocable trust) can be designated to the inactive children. This equalizes the inheritance among them.

Buy-sell Agreements: A properly designed buy-sell agreement guarantees a fair price for aging, handicapped or disabled people should they decide to sell. Withdrawing their business interest ensures control over the business for the beneficiary, or remaining owners. Planned in advance, it can prevent a lot of chaos and let’s face it, law suits. A buy-sell agreement can set the value of the business interest aside for estate tax purposes. Life insurance can be used to provide the cash necessary for the business or the surviving owners to purchase a deceased owner’s interest. But again, you need to plan in advance.

Non-Qualified Deferred Compensation Plans (NQDC): An NQDC isn’t as complicated as it sounds at all. This is a compensation plan that can be used by small businesses to provide seniors with things like: disability benefits, retirement benefits or death benefits. We can help you decide if your business needs one and how to set it up.

Key Man insurance: Many family businesses depend on non-family employees for the company’s continued success. “Key Man” life insurance lets a business insurance that key player in case of death or loss which would heavily impact the business.





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