The Use of Life Insurance in Business
Succession and Estate Planning
PRESENTED BY:
MARK ROSENBAUM
Business Insurance and Succession Planning
• Do you have a plan to transition your business?
If so, what is it?
• Stories of 2008 Plans that did not materialize
Business Insurance and Succession Planning
• Who do you plan to transition to? Why/When?
• Family
• Employees
• Merger or Outside Sale
Business Insurance and Succession Planning
• Family
• Do you have family members in the business?
• What is their role?
• How will this transition treat them?
• Are all children treated equally?
• Will the future generations of children be working
together?
• Under what management direction?
Business Insurance and Succession Planning
• Family
• Can they buy the business?
• Do they have the resources?
• What are the options for funding?
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Cash
Loans
Gift
NQDC
Installment Note
Business Insurance and Succession Planning
• Employees
• Who are the key people and what are their individual
roles?
• Are they managers or potential owners?
• What is the difference?
• Can they buy the business?
• Do they have the resources?
Business Insurance and Succession Planning
• Merger or Outside Sale
• Who are potential buyers outside of the business
• Have you spoken with them?
• What impact will an outside sale have on
family/children/grandchildren?
• What impact will an outside sale have on key
employees?
Questions for the business owner
• Are there circumstances under which you are willing to
sell the business at a discount? If so, what are they?
• To the extend you have key people in place, will they
stay for the transition? Why?
• What plans are in place to assure the success of your
succession plan should you die early?
The role of Life Insurance in Business Succession
Planning
• Keyperson
• Buy/Sell
• Who pays the premium?
• Deferred Compensation/Golden Handcuffs
• Inheritance Equalization
• Estate Taxes
Risk Assessment in Planning
• What percentage of the owner’s estate does the
business represent?
• Will the owner be carrying part of the purchase
price?
Proper uses of life insurance and planning
• In considering the various uses of life insurance,
which products are best suited to the client’s
needs?
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Term
Whole Life
Universal Life
Index Universal Life
Variable Life
Stories of well intentioned planning gone bad…
You have a solution
Stories of well intentioned planning gone bad…
You have a solution
Summary
The value of Life Insurance Solutions in Business
Succession Planning