Any type of business partnership should have a properly designed and executed partnership agreement. As part of that agreement, the parameters around the potential buyout of a partner should be spelled out.
Life insurance can play an important role in such buy/sell planning by providing a lump sum amount to the surviving partners to fund all or part of the buyout of the deceased partner. And in doing so, eliminates the problem of formerly uninvolved spouses now becoming active partners.
This truly provides two critical levels of protection. First, it provides the surviving partners with the funds needed for the buyout at the exact time they are needed. This allows them to keep operating profit inside the company (rather than using it to fund payments to the deceased) and also prevents the need for a fire sale of the business.
Secondarily, it protects the family of the deceased partner. By giving certainty and immediacy to the payments for his/her shares, the family of the deceased doesn't have to take payments over time - and hope that the remaining partners can continue to operate the business to provide enough cash to make those payments.
Blevins Financial will lead business owners through the entire process of structuring the overall buy/sell strategy as well as the proper use of life insurance as part of the strategy.
Blevins Financial, LLC
306 240th PL SE, Sammamish, WA 98074
Phone: 425-837-5419 Fax: 425-484-4004
Information on this web site is for general information purposes only. It is important to keep in mind that there are many ways to apply a strategy which are dependent upon your personal situation. Estate, insurance, tax regulations and laws are very complex and are subject to change. This website, therefore, is not designed to be a substitute for specific tax, legal, or other professional advices. For specific assistance for your personal individual situation the services of an appropriate professional should be sought.