What If I Die Without A Business Partner?

You identify a potential purchaser interested in, and able to take over your business. In the event of your death, your estate will sell your business interest to this person. This person will be obligated to buy your business interest should you die. The potential buyer will purchase a life insurance policy on your life, pay for that policy and be the beneficiary of that policy. At your death they will receive the proceeds from this policy and use these proceeds to purchase your business interests from your estate. This arrangement fixes a value for your business. The value can be determined several ways: a price that both you and the buyer agree on, book value at date of death, or a predetermined formula. You will enter into a unilateral agreement with the buyer to buy your business in the event of your death. The buyer purchases life insurance on your life. At your death the life insurance is paid to the buyer. Your business interest passes to your heirs. The buyer purchases your interest from your heirs with the life insurance proceeds. There are several advantages to this arrangement. Your family is guaranteed a certain amount of money upon your death for your business interest. Your employees know that the business will continue even if you do not. Your creditors and vendors will know that there is a continuity plan in place. The purchaser might very well be a key employee and is now going to stay with you for the long run.

There are considerations that must also be addressed: If the buyer is a child active in the business, inactive children may feel that they did not get their share of the business when you died. Explore with your Blueprints For Advisor and attorney ways to equalize the estate for all of your children involved. When it comes to buying the life insurance on your life you might actually find yourself paying the premium for the buyer. This could conceivably be designed as a bonus arrangement. The situation where a lifetime sale occurs if you do not die must also be addressed. You will likely need to structure an installment sale with the buyer.

The unilateral buy/sell agreement or as it is also known, the One Way Buy/Sell Agreement, is often used with business owners who want to sell their business in the event of their death and or retirement but do not have a co-owner or partner to buy their interest. We tell our business owners on a regular basis that a properly designed exit/contingency plan is of the utmost importance. Business owners periodically recognize that they can make as much money as they currently earn by working for someone else. Why put up with the headaches of business ownership? Because your business is a culture and an asset, dont wait! Effective planning ensures that your hard work will benefit your family/heirs. They deserve to see the fruit of your labors.

Business Advisors, LLC David K Seems, Managing Partner, Stanford Place II, 7979 E. Tufts Ave., Suite 900A, Denver, CO 80237, Phone: 303.708.8774 Fax: 866.609.9083. Gail L. Reeves, Marketing Consultant, Stanford Place II, 7979 E. Tufts Ave., Suite 900A, Denver, CO 80237, Phone: 303.708.8774 Fax: 866.609.9083. Phone: 303-708-8774, www.BusinessAdvisorsLLC.net, info@businessadvisorsllc.net David K. Seems is licensed in CO, NM, WY, MT, AZ, CA, GA, IL, MI, MN, MO, NV, OK, OR, and TX to offer insurance products, life insurance (including variable life), and annuities (including variable annuities), and is securities registered in AZ, CO, MN, NM, and WY and adviser registered in CO. This site is not a solicitation of interest in any of these products in any other state. IMPORTANT CONSUMER INFORMATION: David K. Seems may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if he is excluded or exempted from the state's registration requirements. Follow-up, individualized responses to consumers in a particular state by David K. Seems that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of a broker-dealer, investment adviser, BD agent or IA representative or any financial institution he represents, contact your state securities law administrator. Insurance products from the Principal Financial Group are issued by Principal National Life Insurance Company (except in New York), Principal Life Insurance Company and the companies available through the Preferred Product Network, Inc. Securities and advisory products offered through Princor Financial Services Corporation, 800-247-1737, member SIPC. Principal National, Principal Life, the Preferred Product Network and Princor are members of the Principal Financial Group, Des Moines, IA 50392. David K Seems, Principal National and Principal Life Financial Representative, Princor Registered Representative, Financial Advisor. Business Advisors, LLC is not an affiliate of any company of the Principal Financial Group. Principal Life maintains certificates of authority to transact insurance in all 50 states. Principal Life NAIC identification number is 61271. Principal National NAIC identification number is 71161. Privacy Policy