So You Wanna Sell Buy/Sell or COLI

[James]

I don't know about you guys, but if I had a prospect who couldn't afford a CPA I would put some change in his cup, buy him a good meal and be on my way.

I was referring to the team, most small business owners may very well have an Accountant Service they can use but, likely not on the payroll. Of course I'm sure you go out there and find small business with an entire team of financial consultants that would rival those found at GMC, Microsoft or Walmart. Hey, whatever floats your boat.

 

[Lloydlofton]

Small businesses have overlooked needs that affect not only the business owners and employees but also the owners' families.

A big need is the business continuity for the owners, partners, stockholders, and the families involved.

There's no question that a buy-sell agreement was the right choice for these owners. But did it go far enough?

Without additional planning, one of these owners will carry the weight of the estate taxation for both, and the producer working the case will have missed a golden opportunity.

The buy-sell policies created the need for each owner to plan for the eventuality that he would be the survivor, opening the door for estate planning. One creates the opening for another companion sale.

Life Insurance Selling Magazine had an article on this for reference (yes I wrote it) Click here: Planning for Business Continuity | Articles & Archives | Article Archive | Life Insurance Selling Magazine - The Magazine for Top Life, Health & Financial Services Producers

 

[James]

Small businesses have overlooked needs that affect not only the business owners and employees but also the owners' families.

A big need is the business continuity for the owners, partners, stockholders, and the families involved.

There's no question that a buy-sell agreement was the right choice for these owners. But did it go far enough?

Without additional planning, one of these owners will carry the weight of the estate taxation for both, and the producer working the case will have missed a golden opportunity.

The buy-sell policies created the need for each owner to plan for the eventuality that he would be the survivor, opening the door for estate planning. One creates the opening for another companion sale.

Life Insurance Selling Magazine had an article on this for reference (yes I wrote it) Click here: Planning for Business Continuity | Articles & Archives | Article Archive | Life Insurance Selling Magazine - The Magazine for Top Life, Health & Financial Services Producers

I suggested in another thread that this plan (the dry cleaner and resturanteer) or one like it, "Screws the Spouse". Obviously some got really upset since I wouldn't go along and yes they were correct. I was likely a bit in the holiday spirit if you get my drift and, had a serious problem making my point. I agree, most of these plans simply do not cover the basics once you go in and start peeling the onion.

I also would go further, I walk in and likely hone in on the need of personal protection in the event of a death of an owner, as in estate plan of each owner;

Now I advise that they seek counsel on this policy, mainly it is likely a taxable event. The amount as offer in this example of an ordinary Buy/Sell (often found when out there prospecting) seemingly doesn’t take this into account! So the problem uncovered is the tax liability of the second or either owner, he will not have sufficient funding to buy as one would assume he should. I also rarely ever find a secondary policy to cover the owner that may or may not die to properly cover his/her spouse in the event of the sale of the business. I suggest this, the inheritance issue is what I would go for before the Buy/Sell Funding, at least I have a possible sale that will not require multiple people, even though hopefully the other owner is in likely need for a proper inheritance policy.

Obviously, nothing is going to be sold till you uncover a problem, and estate issue of a business being sold is a big one if not planned for, for any of the owners. I would consider the Buy/Sell a companion sale to Estate Planning of owners. Simply for the fact, individual planning I find easier and quicker at issue then company planning. Esp, if there is already a Buy/Sell Funding in place.

Ps, I would also add that prospecting owners for individual coverage is more fruitful or easier then prospecting for Buy/Sell. IMHO or YMMV

 

[Atlas]

James,

You made a wonderful post man good job.


Atlas

 

[James]

Atlas, good to see you back! Hope the holiday season treated you good.

 

[padthaiforlunch]

 

[Justin Bilyj]

padthailunch bumped this one year after the last post. I will rebump this 3 years later. This is a good thread. I wish James and others could make more threads like this.

 

[sman]

padthailunch bumped this one year after the last post. I will rebump this 3 years later. This is a good thread. I wish James and others could make more threads like this.

Gotta say, I like padthai's "bump" better than yours.

 

[Justin Bilyj]

"Dirty little cheeseburgers"

"Randy, the **** pool is getting full. We better strain it before it overflows and causes a **** slide that could cover this entire community. I will not have a Pompeiian catastrophe happening in Sunnyvale." (Randy "That was lava, not ****, Sir." (Lahey "Don't get smart with me, Randy, it's cop talk. Listen and learn."

 

[rayluk]

Bump~

I have done some buy/sell and key person insurance policies over the years. Most of the time, our planning centered around their business situation and had not moved beyond to their personal planning; and with their families.

I thought there may be two factors into this. One is the spouses are typically not involved. Two is the new estate tax exemption is pretty high.

Anyone has good suggestions?

Thank you!

-Ray