Business Continuation Planning

Prepare for the continued success of your business

As a business owner, you are the lifeblood of your organization, the driving force behind its success. When the time comes to pass the baton,  what will happen to your business when you are ready to retire? Do you have children or other family members ready to continue the family business? Or is there another successor in line who will be able to pick up the reins? Do you have partners or stockholders that need the business to prosper? Most of all, if you died prematurely or became disabled, will the business you worked so hard to build be able to continue...and will your family be financially provided for? Tough questions.

Business continuation planning is a strategy that helps avoid 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.

Because of estate taxes and cash flow difficulties, 70% of all family businesses in this country do not survive through the next generation. Those that make the transition do so because the owner took the time to map out a business continuation plan.

For the 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:

• Allows you to maintain control of the business
• Prevents disputes
• Assures orderly transfer of the business upon death
• Provides an income tax-free death benefit to purchase shares of the business

Some of the continuation strategies that are available are:

Cross purchase plan / Buy sell agreement

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.

Key Man Insurance                   

Another component of the Business Continuation Plan is Key Man Insurance. This insurance is purchased by the company, owned by the company, and the company is the beneficiary. The insurance protects the company on the untimely death of one of its key executives. Often, cash value life insurance is used to fund the risk and provide an executive benefit.

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