Life Insurance can meet business needs as well as personal needs. Continuation of business after death, replacement of key employees, equalization of inheritance for heirs not interested in the business, or the buy out of the other partners become important state planning concerns.
The planning is done through setting up a buy-sell agreement which gives the surviving owners an orderly way to purchase the deceased or disabled owner’s interest in the business. The owner’s attorney draws up an agreement to establish a fair price, make sure adequate funds are available to carry out the agreement’s purchase requirement and bind all parties to the agreement’s provisions.
THE VALUE OF LIFE INSURANCE IN BUSINESS CONTINUATION PLANNING
Provides flexibility and the cash to:
- Allow a family member to retain the business and equalize the value to non-active family members. It can also provide a cash cushion during the transition period.
- Assure creditors and employees that your business will continue after death.
- Provide the dollars needed to purchase your business interest or buy out another owner’s interest if the deceased and or disabled interest is to be sold.
- Offset the loss in value if the business interest is liquidated in a forced sale.
- Tax advantages for the heirs and the surviving owners.
Once your business continuation is in place, you and your business can benefit from life insurance cash values for emergencies, business opportunities or supplemental retirement funding.
In addition, have you ever thought about a loss from a premature death of a key employee with specialized knowledge, skills, or business contacts? In order to protect the business from such a loss, the owner takes out a life insurance policy on the key person making the owner the beneficiary, thereby using the money for the additional costs of running the business and replacing the employee.
Medical Solutions NY can offer several carriers that has several products to assist business owners meet these business concerns and benefit the deceased’s dependents.
Protect you and your family and give Medical Solutions a call to answer any questions you may have concerning business continuation planning.