#BNformed, stay informed

  We all know a person who acts as the "face" of their company. Many times they are the business and without them we'd certainly feel a change in the day to day operations. But what would you do if that person left, became disabled or passed away? If your business relied on them to be financially successful, how would you recover? How long would it take to find a train a replacement? How much revenue loss would occur in that time frame? If you have ever grappled any of these questions, it is probably a good idea to purchase Key Person Insurance. Key Person coverage uses Life Insurance and/or Disability Insurance, to protect businesses from financial loss should a key employee or owner die or become disabled. The majority of the time, the business pays for the insurance and is the beneficiary of the policy; but sharing the premium payments and benefit with the key person is also acceptable. This enables the company to use the proceeds from the life insurance to pay debts,

  Most people don’t start a business thinking about how it will end, but you should. Without a clear path of transfer or an exit plan, you could be leaving your employees and the business in limbo. Depending on the type of entity, there are various tax and legal implications if an owner passes away or divorces without preparing the entity. You or your partners, could now be forced into business with people you don’t know, or worse, don’t like.   So how can you prevent befalling this fate? Well one of the most important things you can do is draft a buy-sell agreement (BSA). A BSA can assist in the transfer of ownership interests and determine how involuntarily acquired shares/assets can be sold back to the company. Most BSAs are set up using Life Insurance to provide the funds needed for buy outs and buys backs upon the death or disability of an owner.     For example, Tom, a 56 year old man owns a law firm with his partner John, 62. John suffers a heart attack and passes away, leaving