Business Continuity Planning

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Purpose of Advanced Planning

An advance plan that specifies the terms by which a business owner’s interest is transferred in the event of:

  • Retirement
  • Death
  • Disability
  • Dissolution or Sale

Advantages to Deceased Business Owner’s Family

  • Protects the interests of the shareholder’s family.
  • Family receives a fair, predetermined price for the business.
  • Family is free from business concerns.
  • Probate process settled more quickly (value established).

Advantages to Surviving Shareholders and Business

  • Timely transition of ownership
  • Effective business management
  • Payment terms for sale predetermined

Methods to Fund the Purchase for Death, Disability or Retirement

  • From business cash flow
  • Establish a sinking fund
  • Insurance programs

Insurance Ownership Arrangements

  • Corporate (or Entity) Owned
  • Individually Owned
    • Cross Ownership
    • Collateral Assignment Method
  • Third Party Ownership
    • Trusted Agreement
    • Trust Ownership
    • General Partnership
    • Qualified PSP

Funding the Plan with Insurance

  • Life Insurance
    • Buy-Out Insurance
    • Key Person Insurance
    • Executive Benefit Life Insurance *
  • Disability Insurance
    • Buy-Out Insurance
    • Business Overhead
    • Reducing Term
    • Qualified Sick Pay *
    • Voluntary Income Protection *
    • * Fringe Benefit Program

Types of Buy-Sell Agreements

  • Corporate Stock Redemption
  • Cross Purchase Agreement
  • Wait & See Buy-Sell Plan

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