What do you want to happen with your business in the event of death or disability – either yours or a co-partner’s? How will your retirement affect your company’s future? Do you want the business to remain in the family?

A solid business continuation plan can help answer your business continuation and succession needs with a custom-tailored plan designed to

• Protect years of financial investment in your business, and
• Ensure your family is well taken care of.

A financial professional can help you with products used to fund different business continuation strategies, which include the following.

Buy-sell agreements

Buy-sell agreements can offer a smart strategy. This is a legal contract that establishes a buyer, the price or pricing mechanism, and the events that will prompt the sale – death, disability, retirement, etc.

There are several types of Buy-Sell agreements: Cross-Purchase, Trusteed and Wait and See. The type you choose depends on who you want your successor to be – a family member, a key executive within the company or an as-yet-unknown person or entity.

It is best that a buy-sell agreement be fully funded. Life insurance is often an excellent instrument for this purpose, as it creates a lump sum of cash to fund the agreement.  Here’s how it works:

• Once the value of your business is determined, the company or individual co-owners purchase policies on the lives of each co-owner, not on themselves.
• If one owner dies, the company or co-owners receive the death benefits – which can be designated for surviving family members as payment for the deceased’s interest in the company.

A financial professional can provide guidance on the methods and ramifications of life insurance funding.

Wills

If you wish the business to remain in the family, a will can also accomplish this. A will lets you retain ownership until your demise, after which it is transferred to a family member of members. However, your business interest may be included in your estate and, therefore, subject to estate taxes. Consulting with your tax attorney is advisable.

Trusts

Setting up a trust may be prudent when you wish to start transferring ownership during your life. A Trust can be structured so that you keep a controlling interest until you are ready to step down from the business. Trusts can include lifetime gifts of interest in your business, an outright sale of your interest, a family limited partnership, or any combination of the above. Federal and/or state gift taxes may apply, so, again, consult your tax attorney.

Stock Redemption Plan

Stock redemptions also can fund a business continuation and succession plan. Your financial professional can elaborate on the various strategies you can use.

Please be advised that this content is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

Securities are offered through AXA Advisors, LLC (member SIPC). AXA Advisors, LLC does not provide legal or tax advice.