Buy-Sell Arrangements
Problem:
The owners of a closely held business want
the business to stay with the remaining owners in the event of death,
disability, or retirement of one of the owners. One of the business owners has
expressed a concern that funds may not be available to buy out a deceased
owner.
Prospects:
Owners of all closely held businesses
including: sole proprietors, partnerships, S corporations, limited liability
companies, and C corporations. Business owners that have an interest in:
• Establishing an estate tax value for the
business.
• Ensuring a ready market for their business
interest.
• Seeing that the business stays within the
family or owner group.
• Ensuring that funds will be available to
purchase a deceased owner’s interest.
Solution:
Establishing and funding a buy-sell
arrangement with life insurance may be a cost-effective means to ensure the
smooth transition of a departing owner. A buy-sell arrangement is an agreement
in which one party agrees to buy, and another party agrees to sell, a business
interest. Funding the arrangement with life insurance helps to ensure that cash
will be available for the buyout, no matter when death occurs.
Additional Benefits of
Establishing and Funding a Buy-Sell Arrangement:
For the
departing owner or heirs:
• If properly drafted, implemented and
maintained, the buy-sell agreement helps to establish the business value for
estate tax purposes.
• It provides liquidity to help pay estate
taxes and/or meet family income needs.
• It guarantees a buyer, providing a ready
market for the sale of the business interest.
For the
purchasing party(s):
• It minimizes the risk of the business being
sold to outsiders and allows surviving owners and/or family members to retain
control.
• Employees, creditors, and suppliers gain
added security that the business will continue.
• When funded with life insurance, cash is
available to help meet the purchase obligations created by the agreement.*
CornerStone Financial
Whether your
nest-egg is worth millions or thousands,
You and your
family deserve it more than the government....
We are here to help you with all of your
financial and insurance needs. Our skilled professionals are licensed with
over 100 top name companies and can help you gain a better understanding of the
concepts behind insurance including investing, retirement and estate
planning. There are literally thousands of products to choose from,
but we can help pinpoint what is best for you and your situation. Please
do not hesitate to contact us if you have questions.
Contact:
Eric Tuttobene
President/CEO
CornerStone
Financial
(615) 427-8780
IMPORTANT DISCLOSURES
The
information presented here is not specific to any individual's personal
circumstances.
To the extent
that this material concerns tax matters, it is not intended or written to be
used, and cannot be used, by a taxpayer for the purpose of avoiding penalties
that may be imposed by law. Each taxpayer should seek independent advice from a
tax professional based on his or her individual circumstances.
These
materials are provided for general information and educational purposes based
upon publicly available information from sources believed to be reliable—we
cannot assure the accuracy or completeness of these materials. The information
in these materials may change at any time and without notice.
