Is your business future-proof? Business plan, marketing plan, financial plan. Your business has a lot of plans, but what about a protection plan? From retaining talent to funding improvements to ensuring smooth business succession, you want to know your business can continue to thrive. Here are some considerations to making sure it stays protected.
How may I transition the ownership of the business? Without proper planning, the sudden death or disability of a small business owner may have a devastating impact on the business, the business’ employees, and the other business owners. It may also have a significant financial impact on the business owner’s family. A properly structured business continuation plan (i.e. a buy-sell agreement) funded with life insurance may help to minimize the impact for both the business and the business owner’s family. Talk to your financial professional to learn more.
What is a business continuation plan for a business with many owners? Because a business with multiple owners may need flexibility, there are a variety of ways to structure a buy-sell arrangement, including Entity Purchase Buy-Sell, Cross-Purchase Buy-Sell, Wait-and-See Buy-Sell, and a One-Way Buy-Sell. Talk to your financial professional to help you discover what strategy may be right for you based on your business planning needs.
How do I help protect my business against the loss of a key employee? The success of a business may hinge on the ideas and leadership provided by a key executive. The sudden death of that key executive may have a severe economic impact on the business due to the loss of that executive’s unique skills and abilities. Additionally, the business may have to spend substantial amounts of cash to recruit and train the replacement executive. A prudent strategy to protect the business during the transition period is key person life insurance. Talk to your financial professional for details. How can my business stand out in today's competitive climate? Whether you are looking to provide your employees a comprehensive 401(k) or a plan that incentivizes key employees only, you may fund a variety of customized solutions with our mutual funds, annuities, and life insurance. We offer professional, consultative support and quality financial products to help you complete your employee benefits package. Talk your financial professional and qualified and independent tax and legal advisors for details. How can I help provide a comfortable retirement for my employees? Inadequate retirement savings is not only a concern for the owners and employees of a business but also for their families. For those close to retirement, the problem can be two-fold: how to provide for their families and how to save for retirement in a limited timeframe if the employee dies prior to retirement. A split-funded defined benefit plan funded with life insurance and other assets/investments chosen by the client's financial professional may be able to provide both meaningful death benefit protection and supplemental retirement benefits. Talk to your financial professional to help you discover if this or another strategy using life insurance or another financial product may be right for you based on your business planning needs.
What if I want my business to end up being employee-owned? One way to plan is with an Employee Stock Ownership Plan (ESOP). An ESOP is a special type of qualified profit-sharing plan that invests primarily in employer securities. If an S- or C-Corporation owner doesn’t have an heir, co-owner, or outside buyer interested in taking over the business, or wants the business to end up being employee-owned, an ESOP may be an effective vehicle for creating a source of funds to purchase the owners’ interest in the company. Not only does the ESOP create a buyer for the business owner’s stock but a C-Corporation business owner (but not an S-Corporation owner) can use the sale proceeds to purchase “qualified replacement property” and defer taxation on the sale of the stock to the ESOP. This allows a C-Corporation owner to sell part or all of the business to the ESOP without immediate taxation and use the proceeds to diversify assets through the purchase of qualified securities. Consult with your independent legal and tax advisors for additional details.
How can I protect my business from estate taxes? Typically, there are two ways to plan. One is the use of life insurance within an irrevocable life insurance trust (ILIT) and the other is the use of business assets to pay life insurance premiums and hold the life insurance as a business-owned asset used in a buy-sell arrangement (entity redemption). The determination is generally based on your estate tax liability and other tax considerations. Consult with your independent legal and tax advisors for additional details.