FOUR WAYS TO FUND A BUY-SELL PLAN

There are FOUR ways to fund a buy-sell plan at an owner’s death:

1. Cash Method

The
purchaser(s) could accumulate sufficient cash to buy the business
interest at the owner’s death. Unfortunately, it could take many years
to save the necessary funds, while the full amount may be needed in
just a few months or years.

2. Installment Method

The
purchase price could be paid in installments after the owner’s death.
For the purchaser(s), this could mean a drain on business income for
years. In addition, payments to the surviving family would be dependent
on future business performance after the owner’s death.

3. Loan Method

Assuming
that the new owner(s) could obtain a business loan, borrowing the
purchase price requires that future business income be used to repay
the loan PLUS interest.

4. Insured Method

Only
life insurance can guarantee that the cash needed to complete the sale
will be available exactly when needed at the owner’s death, assuming
that the business has been accurately valued.

If you had died or become disabled yesterday, who would own and manage your business today?

The purpose of this newsletter is to provide information of general interest to our clients, potential clients and other professionals. The information provided is general in nature and should not be considered complete information on any product or concept described.

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