Insurance

As a business owner you understand that your business is unique. Business owner succession and security planning is the process of identifying risks that may imperil your business, such as the death, disability or serious illness of a key employee or owner – and adopting risk management strategies to minimize, eliminate or transfer these risks. There are good reasons for addressing these risks today. While a business represents a source of current income for many business owners, the value of the business can also represent a primary source of income in retirement. Business continuation strategies are critical not only for the immediate survival of the business, but to ensure that the business can be relied upon to generate the expected value for the owner when they exit the business.

How death changes everything

When a sole owner, shareholder or partner dies, the surviving heirs and partners usually have three options in dealing with the deceased owner’s business interest

Here is a brief description of each:

• Remain in the business: While heirs can remain as owners in either an active or inactive role, there are risks to this arrangement, in particular the potential for conflicting opinions about key issues such as compensation and the overall direction of the business. It is also imperative that the heirs are qualified to operate the business and have access to adequate capital.
• Take on an outsider who purchases the deceased’s business interest: Outside buyers are seldom interested in purchasing a deceased’s business interest in a closely-held business.
• Liquidate the business

Unless an alternative can be agreed upon and fully funded, the unfortunate reality is the sale or liquidation of the business sadly enough may be the only option, although it is far from ideal as only a fraction of going concern value may be realized, and the liquidation proceeds may not be enough to pay the tax and meet other estate obligations.

For that reason, it only makes financial sense to underpin the value of your business with Life Insurance. By taking this first simple step, you will be guaranteeing a willing buyer with ready cash for your heirs when it’s needed – so they can receive full value for your hard work and sweat equity rather than “fire sale” prices.

Life Insurance can provide tax-free funding and liquidity when it’s needed most. There are many types of coverage available today. Some are appropriate for you while others are not. Let us help you decide what type of plan is best for you.

Whether you want the lowest cost today - online term quotes, or the best value, let us create a custom-designed solution that fits. Both options can be easily tailored to your cash flow.

Please contact us for more information on how to build a safety net around your business.