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Ensuring Your Business Survives (even if you do not)

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Ensuring Your Business Survives (even if you do not) -

If you own a business, the business you've built your pride and joy, and most likely your source of income. It is therefore essential to think about the future of your business and that does not include you.

You might think that if you die, your family could maintain their income by running their own company or by hiring someone to manage day to day. The fact is, your relatives may not have the skills or desire to work, and your co-owners can not accommodate the idea of ​​involuntary partner.

Therefore a buy-sell agreement is important to consider. This is a legal agreement between the owners to buy from the company of a deceased owner to a prior agreement on the price.

There are four ways to finance a buyback plan for the death of an owner. They include:

Method 1. Cash: The buyer (s) could accumulate enough cash to buy the interest of the company to the death of the owner. Unfortunately, it could take many years to save the necessary funds, while the total amount may be necessary in a few months or years.

2. Method Deposit: The purchase price may be paid in installments after the death of the owner. For the buyer (s), it could mean a drain on business income for years. In addition, payments to the surviving family would depend on the future performance of the company after the death of the owner.

3. loan method :. Assuming that the new owner (s) could get a business loan, borrow the purchase price requires that the future business income be used to pay the loan interest PLUS

4. method Insured: only life insurance can ensure that the money necessary to make the sale will be available exactly when needed for the death of the owner, assuming the company has been assessed accurately

With a well structured buy. -Sell Agreement funded with life insurance, your business partners will not have to scramble to come up with the money to buy your share of the business and you will be guaranteed that your survivors will be compensated fairly and quickly.

this issue is important enough that you should talk to your advisor today about how you can start the process to implement this important strategy.

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