Permanently Fund The Buy and Sell Agreement
As a business owner finding solutions to today’s problems are not always solutions to future problems.
- Keeping key employees
- Offsetting capital gains
- Retirement diversification
- Estate equality
- Debt reduction
- Vendor financing
- Supporting charities
- Tax deferred growth
- Protect family
- Funding buy and sell agreement
Insurance can provide the solution (Term 10, 20, 30) permanent (whole life, universal life, t-100)
In distant future,
- Term (becomes too expensive)
- Keeping key employees (Probably not)
- Offsetting capital gains (Probably not)
- Retirement diversification (No)
- Estate equality (Probably not)
- Debt reduction (Probably not)
- Vendor financing (No)
- Supporting charities (Probably not)
- Tax deferred growth (No)
- Protect family (Probably not)
- Funding buy/ sell agreement (Probably not)
- Permanent (expensive early on)
- Keeping key employees (Probably)
- Offsetting capital gains (Yes)
- Retirement diversification (Yes)
- Estate equality (Probably)
- Debt reduction (Probably)
- Vendor financing (Probably)
- Supporting charities (Yes)
- Tax deferred growth (Yes)
- Protect family (Probably)
- Funding buy/ sell agreement (Yes)
Insurance can also be used to fund a buy and sell agreement when a shareholder wants to leave. To do this permanent insurance must be used (Whole life/Universal Life). Unlike a buy and sell agreement funded by term insurance which provides benefit only when the owner dies, permanent insurance with a cash value can be transferred to departing shareholder.
Having money grow tax-deferred and being able to access the money tax-free is very powerful especially when money can be borrowed at a lower rate and have it earn a higher rate. With the rising level of personal tax rates it makes sense to keep as much money as possible for long term growth within your corporation. Using permanent life insurance is one of several ways to efficiently plan for the distant future.
Surround yourself with a dream team to help maximize your long term funding needs.
