- January 7, 2008
- Posted by: Brian Poncelet
- Category: Approved
1) Is your business safe?
2) Is your family protected?
3) If something happens to you what happens to your business?
4) Are your finances protected?
5) Have you taken steps to protect the health of your business?
There are three solutions to protect your business and your family.
Thes best alternative upon the death of a shareholder may be liquidation if:
-No replacement is set in place
-There is no cash on hand
-No or lack of corporate credit
-Can offset the shrinking value of good will
-Can provide heirs with the cash equivalent of the deceased’s business interest
2. Reorganization and retention
-Heirs are willing to and able to take over the business.
-There is enough cash to pay surviving spouse and equal inheritances for children not connected with the business
-There is sufficient cash to overcome losses during the changeover period.
-Can provide spouse with income until heirs are established as active shareholders
-Protects against financial hardship for all parties involved
-Can ensure business maintains financial stability and continues operations
3. Sale to Surviving Shareholders
Selling the deceased’s share will be a good option if:
-Customers and creditors approve transfer of the deceased’s business interest to surviving shareholders
-Continuation of corporate credit is assured
-Prevents the introduction of new, perhaps unwanted management
-Shareholders should establish an insured buy sell agreement that sets out the commitments to buy and sell the shares at an agreed value