PROTECTING A BUSINESS PARTNERSHIP
PROPER FUNDING IS ESSENTIAL TO THE AGREEMENT’S EFFECTIVENESS
It is important to document the desired outcome, but it is also critical to manage the written document and proactively allocate funds in a strategic manner. It is very possible to leverage the funds that are allocated so that they are able to be utilized by more than one of the buy-sell triggers. The Reichert Company can guide you in the process of developing and funding a buy-sell agreement suited to the needs of your business.
WHEN YOUR LIFE INSURANCE POLICY IS NO LONGER NEEDED
Situations may arise when you no longer need or want your life insurance policy, generally due to:
- Changes in your planning needs (e.g., retirement income needs, changes in estate taxes, business changes, etc.) and/or;
- Changes in the policy structure (e.g., carrier-imposed premium increases, reduced duration of coverage, and other policy performance problems)
- Allow the policy to lapse
- Surrender the policy for cash value
- Restructure the policy
- Exchange for a new life policy or an annuity
- Pursue a life settlement when a higher net value seems likely
In a life settlement agreement, the current life insurance policy owner transfers the ownership and beneficiary designations to a third party, who receives the death proceeds at the passing of the insured. As a result, this buyer has a financial interest in the seller’s death. When an individual decides to sell their policy, he or she must provide complete access to his or her medical history, and other personal information, that may affect his or her life expectancy. This information is requested during the initial application for a life settlement. After the completion of the sale, there may be an ongoing obligation to disclose similar and additional information at a later date. A life settlement may affect the seller’s eligibility for certain public assistance programs, such as Medicaid, and there may be tax consequences. Individuals should discuss the taxation of the proceeds received with their tax advisor. Valmark Securities considers a life settlement a security transaction. Valmark and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser. A life settlement transaction may require an extended period of time to complete. Due to the complexity of the transaction, fees and costs incurred with the life settlement transaction may be substantially higher than other securities.
If you are ready to start planning for your business exit, then give us a call and we will help guide you through the process of cashing out of your business and moving on in style and on your terms.