Small
Business Financial Planning
Small Business Financial Planning
Business Planning Checklist
Types of Business Insurance Concerns
- Buy-Sell Plan
- Compensation Programs
- Deferred Compensation
- Key Employees
- Split Dollar
Buy-Sell Plan/Succession Plan
Creating a structure for transferring a business from one owner to the next is called succession planning. It brings together critical players - the owners, partners, key employees and the advisors.
Succession planning begins with an examination of operational, financial and personal issues. The end result is development of a succession plan.
This process also can:
- Improve operations
- Boost profitability and growth
- Strengthen relationships among everyone involved
The buy-sell agreement is at the heart of succession planning. Properly designed and funded, this plan can determine who will take over the business and at what value. It can transfer ownership to those who will remain active in the business and make sure you and your heirs receive a fair price for your business interests.
Partnerships or corporations can set up a buy-sell agreement in the form of:
- A cross purchase, in which the estate of the deceased owner sells the business interest to a surviving business associate
- An entity purchase, in which the estate sells the business interest to the business entity
Funding a buy-sell agreement
Funding with life insurance ensures that your family or estate is paid fair market value in cash at the time when it is most needed
. If the business is sold to a surviving owner, life insurance provides the cash needed to buy your interest, thereby assuring a smooth, complete transition of management and control.
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