Suppose you are a small business partner, running your company with one other owner. It is likely that much of your net worth is tied up in your business, and if you died, much of your estate would involve assets of the company. If your family doesn't want to take over your roll, and they (rightly) want your share of the business value, what should your partner do? One of the easiest solutions is for both of you to purchase life insurance on each other at a value approximately equal to your share of the business. Then, when you die, your business partner receives the life insurance proceeds and pays it to your family. This is called a "cross purchase" agreement. If more than two of you own the business, buying a policy on everyone can be more complicated. In this case, it's more likely the business itself would purchase insurance on the lives of the owners, which could be used to pay each owner's business value to their families. This is called an "entity purchase" agreement. Many small businesses have had to close due to the death of one of the owners. Don't let your business become a statistic!
Be Prosperous!
Peggy
No comments:
Post a Comment