One of the better move would have been to have taken insurance
The major common business uses for life insurance is to fund buy and sell agreements
. Chair person insurance is also another use. I'll get to main person Florida Insurance Quotes in another post but first some details, through the use of an illustration, about finance buy/sell agreements.Bill and Sara are equal shareholders in a software development business worth $2,000,000. The business is booming and is doing well. Bill is the "geeky" and Sara runs sales and PR. Bill is married to Lisa who is a teacher. Bob, who runs an electrical contracting business has tied a knot with Sara.. Things are going well but one day Bill develops high blood pressure, lightheadedness and over time is ineffective to work full time. He is detected with a heart problem, has a quadruple bypass but unluckily the condition deteriorates. Within a year, Bill passes away. Along with the emotional upset, Sara now has a company without a technical expert who create the software programs.
So Bill has to be replaced. As Bill drew $100,000 every year out of the business and (his wife) Lisa needs the income to pay bills. Now Sara has three problems: the emotive loss of her business spouse, the loss of the technical brains of the business and now the financial problems of her new partner. Who's the new partner? Answer: Bill's heir is none other than Bill's wife Lisa. Bill left all his tasks to Lisa which also includes his share of the business. This is a mess.
What should be done to avoid it? By having a buy/sell agreement and funding that agreement. This would have allowed the surviving shareholder, Sara to pay Bill's heir, Lisa, for the business. Sara would have then owned the business 100% and Lisa would have cash equal to Bill's shares. Since there will be funds needed to hire a alternative and a potential financial disruption of the business, key person life insurance would have been a good idea as well. The problem is where does Sara get the money to buy out Lisa?
One of the better move would have been to have taken life insurance out covering each one along with agreeing to the purchase out while they were both alive. How can this be play out? When both were healthy, Bill and Sara agree that the value of the business is $2,000,000. Both Bill and Sara and their spouses sign off on a buy sell agreement that holds their attorney draws up it. When Bill died Sara would have received $1,000,000 which she could then use to buy Lisa's shares. Sara then would own 100% of the business. Bill's heirs have same income value as their value of the company. This is smart planning. If you have a business with other Florida Insurance Quotes.
One of the better move would have been to have taken insurance
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