Business Succession Preserve the value of your interest in the business,
exit with the least cost
and complication
Buy/Sell Agreement Creates certainty for the continuing owners and
ensures fair value for
the outgoing owner
Estate Planning Getting ownership issues
right is fundamental
to an effective estate
planning strategy
Asset Protection Organising your assets
and affairs in advance
to place them beyond
the reach of possible
future creditors
Life Risk Management The value of the document
is diminished unless funds
are available to pay the
owner's family
Up until now our thinking and planning has centered on a business owner exiting the business, voluntarily or involuntarily. The buy/sell agreement included a formula for valuing his/her interest and estate planning and asset protection techniques have been implemented to prevent erosion of that value.
While the agreement is a crucial document to the financial security of the outgoing owners family, the value of the document is diminished unless funds are available for paying the owner's family. The unforeseen death of a business owner could severely strap the remaining owners financially, unless appropriate funding has been arranged.
By far the safest method is the use of life insurance. The rest depend upon the financial solvency of the business or the other owners, at the time the purchase is to be made. How do the methods compare>>.
Other Planning Considerations
Death is typically the key event in structuring a buy/sell agreement. Equally important is the triggering event of a disability preventing an owner from working for an extended period of time or worse still, bringing to a complete stop all future work prospects. Disability insurance for immediate and medium term defined events is available through salary continuation plans and these work to offset the financial drain on the business and general liquidity for the affected business owner.
Events such as heart attack, stroke, cancer or permanent disablement can have a cascading impact on the financial viability of the business, fellow business owners and their respective families. Fortunately these events too can be insured against. Doing so is integral to prudent business financial planning and stability.
Key man insurance is not directly connected with the implementation of a buy/sell agreement, since the purpose of key man insurance is to compensate the business for the loss of the key man's service and not to fund the purchase of his interest in the business. However, the owners should seriously consider the need for key man insurance at the time the buy/sell agreement is implemented and when they are seriously considering the long range financial needs of the business.
Of all the steps in the life risk management process,
the most important is TO ACT
Putting the right money
into the right hands
at the right time
Where to start?........we can help
call us (02) 9419 5200
