VIDEO ON DEMAND COMING SOON: Downloadable career advice in the palm of your hand!

Mentorship: The Key to Attracting More Women to Science and Math
What IBM has learned about reaching out to women>>


My Life's Protection
What if you died tonight? How would your family and/or your business fare financially? What if you had a stroke? Ended up in a coma? You have to plan.>>

PLANNING MY FUTURE

My Business
Page 3


Your vision made it a reality and your hard work built it. Your business is probably both a tremendous challenge and a source of personal satisfaction. It is probably also a cornerstone of your family's financial security. Therefore, don't leave success to chance. Following are some cost-effective solutions to business continuation and family protection issues.

Single Owner
If you are the sole proprietor, it is up to you to plan for the disposition of your business upon your death – whether the business continues with a family member or someone else at the helm, or closes its doors. Determining if the business is to continue requires considering factors such as:

• Is your spouse involved in or interested in your company? His career may be in another field.
  
• How old are your children? They may be years away from adulthood.
  
• If you have grown children, is one or more of them in the business? Adult offspring may have gone into totally different fields, perhaps relocated.

Discuss these issues with your family, make some decisions and review these plans periodically as circumstances change. You certainly want to avoid a situation where your family is forced to sell the business or liquidate its assets at pennies on the dollar because there is no plan in place and they are in desperate financial straits.

Three Options
In the absence of a family member stepping in and willingly taking over your role, there are three options for your business:

1. Liquidate: Life insurance proceeds can make up the difference between the auction block price of your business assets and the true value of your company.

2. Sell: In this scenario, life insurance proceeds can make up income lost by your business in your absence and help ensure that financial obligations to creditors and employees are met. Life insurance also can keep your family from having to sell for less than your company is worth.

3. Maintain ownership and hire someone to manage the company for the family: This might be a permanent solution or a temporary one for a younger family to allow the children to grow up.

Co-Owners
The buy-sell agreement provides for the orderly transfer of ownership interests when one of the owners dies. As the surviving co-owner, you want to protect the future of your business:

• You, singly, or as part of the current management, want to retain control of the company. 
  
• You don't want to be forced to work with a member of the deceased owner's family, someone who is not likely a good candidate to step in.
  
• You don't want to have to worry about the family selling its interest in the company to an outsider not of your choosing.
  
• You want a reasonable buyout price to be predetermined or to trust that the valuation method used will arrive at one.
  
• You want to pay that price with "discounted dollars" if that's possible.

As there are several different types of buy-sell agreements, enlist professional legal help to create the best agreement for your particular situation.

 

Page 1  2  3  4