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  2. Business Continuation Strategies

Business Continuation Strategies

Prepare for the continued success of your business after you're gone.

Business continuation strategies can help you avoid the problems that can occur when a business owner dies. A life insurance funded business continuation plan provides a wide variety of benefits for your family and the business.

For your family:

  • Prevents conflict with surviving owners
  • Assures a fair price for the business
  • May set the value of your business for federal estate tax purposes
  • Can provide cash for your estate

For the business:

  • Keeps new and/or unwanted owners out of the business
  • Prevents disputes
  • Ensures continuity and orderly transfer of ownership
  • May provide tax-free cash to purchase stock

Several business continuation strategies are available:

Consult your financial Advisor,attorney and other financial professionals for more information about creating a Business Continuation Strategy that's right for you.

Cross Purchase Plan

An agreement between co-owners of a business. Surviving owners purchase pro rata shares of the deceased owner's stock from the estate. To fund the purchase, each stockholder owns, pays premium on and is the beneficiary of an appropriate amount of life insurance on the other owners.

Stock Redemption/Entity Purchase Plan

The business becomes obligated to purchase the stock or partnership share of a deceased shareholder or partner. The business owns, pays premium on and is the beneficiary of life insurance on each shareholder or partner.

LifeCycle Buy-Sell

Combines the benefits of the traditional stock redemption and cross purchase methods. Provides several benefits, including the ability to supplement retirement income and allocate the premiums as desired.

Section 303 Stock Redemption Plan

A special type of stock redemption plan that can provide cash to the estate of a deceased shareholder in a tax-favored manner. Allows a corporation to redeem a deceased shareholder's stock without incurring income taxable dividends. The potential for dividend taxation upon a stock redemption exists when a business is passed on to surviving family members.

One-Way Buy-Sell Agreement

Allows a single key employee or an outsider to purchase the business outright from the business owner's family using the death proceeds from a life insurance policy following the business owner's death.

 

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods.  Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.​ Financial Advisors do not provide specific tax/legal advice and this information should not be considered as such.  You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

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  •   1199 Raritan Road, Clark, New Jersey 07066
  •   732-340-1410
  •   Doug@wealthmanagegroup.com

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Wealth Management Group LLC. is independently owned and operated, and offers its own suite of products and services entirely independent of Securian.

Certain individuals associated with Wealth Management Group LLC. are registered with and offer securities and investment advisory services through Securian Financial Services, Inc. ("Securian"), a registered broker-dealer and investment adviser, member FINRA / SIPC. Individuals registered with Securian are authorized to offer only those securities and investment advisory services that have been specifically approved by Securian. Additional information about individuals registered with FINRA can be found on FINRA’s BrokerCheck. For information about which individuals associated with Wealth Management Group LLC. are registered with Securian, as well as information about which securities and investment advisory services such individuals are authorized to offer on Securian’s behalf, please contact Securian at 1-800-820-4205. 1837084 DOFU 07/2017

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