Buy-sell & protection

Did you know that if you own your own private corporation, we can show you strategies that will protect your assets from taxable investments?

Buy-sell agreement and how we can help!

Business loan protection involves the use of life insurance to create immediate working capital for a business to repay business debts in the event of the death of a business owner(s) or other key executives. In many businesses situations, adequate financing is difficult to obtain. Creditors will often require that business owner(s) personally guarantee a loan. The untimely death of a business owner or another key executive may cause creditors to demand immediate repayment of outstanding business debts. This may place an unbearable burden on the business and force the liquidation of a key business assets at a fire sale price at a time when business results may already be severely impacted by the death.
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In the absence of proper planning, the survival of the business may thus be affected by the death of the business owner or another key executive.A solution is to purchase an insurance policy on the life of the business owner(s) or other key executives. Proceeds from the life insurance policy received as a consequence of the death of the life insured are Tax-free and may be used to pay down the outstanding business debt.

A life insurance policy purchased for business loan protection can improve the ability of a business to negotiate loans, and provide for the repayment of business debts in the event of the death of a business owner or another key executive using tax-free life insurance proceeds. It can also prevent the business owner(s) or their estate from becoming personally liable for the business debts in the event of a death.
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A key component of an integrated financial plan is planning for business succession. The business interest often accounts for a substantial portion of the wealth the business owner has accumulated. Ensuring a plan is in place helps the business and the remaining owners, survive the transition. This is particularly true in the event of premature death. Changes in ownership may create financial obligations on the part of the remaining owners and may also have income tax implications for the withdrawing owner and the remaining owners.An integral part of the succession plan is to ensure financing is in place in the event of death to fund the purchase and sale of the business interest. The succession plan should also provide the business owner with sufficient liquidity to fund the related income taxes and where possible, take advantage of any tax deferral or tax minimization strategies that may be available.In the case of closely held corporations or partnerships, one of the most important tools for implementing the business succession plan is the shareholders agreement or partnership agreement. Once the business succession plan is developed, an agreement can be drafted to reflect the needs and wishes of the various parties.
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Life insurance is generally an efficient means of funding the obligation under a buy/sell agreement in the event of the death of a shareholder or partner. There are numerous ways to structure a buyout on death and life insurance funding plays an important role in ensuring the buyout occurs. In considering the various methods for structuring a buy/sell agreement, it should be kept in mind that there is no "right way" to proceed. Each method has its 'pros' and 'cons' and must be considered in light of the circumstances of a given situation. This is why it is important to talk with one of our specialists so that all situations can be considered and the right option for you is built.