As a business owner, you are used to being in control. The proof is your successful business. Can you imagine a time when you will not be in control? Perhaps a severe injury or illness forces you to retire and relinquish that control or a divorce…
Will your business continue to be what it is today? Will you continue to support your family? Who will make the decisions? Do you have a plan in case the unexpected happens? Buy-sell agreements play an increasingly important role in the financial well-being of many companies today. This is particularly true of family-owned and closely held businesses.
- When an owner dies, the owners can purchase that part of the business from the estate for its full fair market value. The heirs receive cash and no longer have to worry about the business.
- If an owner retires due to disability or retirement, the remaining owners can use the cash value accumulation available in a life insurance policy to help purchase the outgoing owner’s interest in the business.
- Buy-Sell Agreements identify a buyer for your business interest and create a ready market to help ensure the smooth continuation of business.
- Life insurance can help provide buyout financing the instant it’s needed.
- A current business valuation with regular review and updates.
A buy-sell agreement is a critical component to every business continuation plan. In the unfortunate event of the death of a business owner, partner, or shareholder, the buy-sell agreement ensures that the business will remain intact while surviving family members will receive fair cash compensation for the interest in the business. the deceased person in the company. Most buy-sell agreements are financed with life insurance that provides immediate funds to purchase the property from the deceased owner’s family at fair market value.
Most buy-sell agreements are financed with life insurance that provides immediate funds to purchase the property from the deceased owner’s family at fair market value. When determining your insurance needs to finance your buy-sell agreements or owner’s disability plans, be sure to consider the costs, expenses, or liabilities associated with your business and how they will be handled. Call a business succession expert to discuss and advise you on how to set up your plan.