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Planning For Changes In Ownership If one of your partners died, would you be able to do business with his or her heirs? Or, if you died, is your family ready to work with your partner? You can prepare for the problems that come with changes in ownership by using one or a combination of the following Business Continuation Planning alternatives:
Buy-Sell Agreements The most common business continuation planning tool is a buy-sell agreement. A buy-sell agreement establishes the value of your business and assures a ready market for your share in the business after you're gone. With life insurance funding the agreement, the surviving partners are assured of the means to buy out heirs and retain control over the business, and the deceased owner's stock can be converted into cash for the heirs.
Key Employee Life Insurance A business' most valuable assets are its key employees. When you lose a key employee, you may also lose considerable time and money trying to find and train a replacement. Key employee life insurance provides you with the funds you need to keep the business running smoothly during this difficult period.
Personal Estate Planning As the owner of a business, much of your wealth is probably tied up in your business. While that may help your business grow, it may create severe liquidity problems for the heirs of your estate after you're gone. By carefully incorporating your business needs into a total estate plan, you'll be able to meet your estate tax and liquidity needs while you preserve the full value of your business for your family and associates.
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Copyright © 1998 Auerbach & Gussin
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