Purpose of Advanced Planning

An advance plan that specifies the terms by which a business owner’s interest is transferred in the event of:

• Retirement
• Death
• Disability
• Dissolution or Sale

Advantages to Deceased Business Owner’s Family

• Protects the interests of the shareholder’s family.
• Family receives a fair, predetermined price for the business.
• Family is free from business concerns.
• Probate process settled more quickly (value established).

Advantages to Surviving Shareholders and Business

• Timely transition of ownership
• Effective business management
• Payment terms for sale predetermined

Methods to Fund the Purchase for Death, Disability or Retirement

• From business cash flow
• Establish a sinking fund
• Insurance programs

Insurance Ownership Arrangements

• Corporate (or Entity) Owned
• Individually Owned
  • Cross Ownership
  • Collateral Assignment Method
• Third Party Ownership
  • Trustee Agreement
  • Trust Ownership
  • General Partnership
  • Qualified PSP

Funding the Plan with Insurance

• Life Insurance
  • Buy-Out Insurance
  • Key Person Insurance
  • Executive Benefit Life Insurance *
• Disability Insurance
  • Buy-Out Insurance
  • Business Overhead
  • Reducing Term
  • Qualified Sick Pay *
  • Voluntary Income Protection *

* Fringe Benefit Program

Types of Buy-Sell Agreements

• Corporate Stock Redemption
• Cross Purchase Agreement
• Wait & See Buy-Sell Plan