If you own a small business, then your estate plan should include provisions for the transfer or continuation of the business after the death or disability. It is often referred to as "the business plan of succession."
If you have one or more business partners, you may wish to obtain life insurance policies on each partner, with the company as the beneficiary, so that funds are available for the surviving partners to buy the company shares of the deceased from his or her surviving heirs. You can also hire Florida estate planning lawyer to get the best legal solutions.
Image Source: Google
Funds paid out from a "key employee" life insurance policy can also be used by the company to finance the continued operation of the business, especially in situations in which the loss of the partner will directly result in a substantial loss of income, credit-rating, or production.
The surviving partners also may not want the spouse or surviving children of the deceased partner – who may have no knowledge or experience in the operation of the business – to obtain any control over the business.
Lenders may actually require the company to obtain a "key employee" life insurance policy on each of the partners or other irreplaceable employees, as a condition prior to extending credit to the company.
In addition to the life insurance policy, the company should enter into a "buy-sell agreement" with each of the partners. This is an agreement under which the surviving partners agree to purchase the interest of any deceased partner, from the surviving heirs of the deceased partner.