Advising Clients since 1980
Business Continuation Insurance
This type of insurance addresses what will happen to the business when the owner or key employees dies or is in some other way unable to continue to contribute to the success of the business. Will heirs have enough cash to pay for estate taxes? Will other owners want to continue the business with the deceased owner’s heirs?
These issues can be solved with the use of a buy-sell agreement. A buy-sell agreement is a contract between two or more parties involved in a business. The agreement can be between shareholders of a corporation, partners of a partnership, or a key employee and a sole proprietor.
The agreement obligates the surviving owners, a key employee or the business itself to purchase the interest of the deceased owner.
Properly Drafted Buy-Sell Agreement
Creates a guaranteed market for the business interest
Allows those who are interested in continuing the business to do so without interference from the deceased owner’s heirs
Provides liquidity for the estate of the deceased owner by turning the business interest into cash
Establishes the value of the business for federal estate tax purposes
An attorney will draft the buy-sell agreement. To fund the agreement, life insurance should be considered since insurance proceeds offer the advantage of being available when needed, regardless of when the owner dies.
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Charles M. Bloom, Registered Principal offers securities and advisory services through Centaurus Financial, Inc. - Member FINRA and SIPC - 775 Avenida Pequena, CA, 93111 (mailing address: 3905 State Street Suite 7173, Santa Barbara, CA, 93105) - CA Life Insurance License No. 0A52786 - Centaurus Financial, Inc. and Shoreline Wealth & Investment Management are not affiliated companies.
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