BUSINESS SUCCESSION PLANNING

Transcription

1 Partners Advantage Business Insurance Curriculum Webinar 1: BUSINESS SUCCESSION PLANNING Hosted by Partners Advantage Rich Finkelstein, MBA, LUTCF Director of Advanced Markets Presented by Principal Will Heidbreder, JD, MBA, CPA, CLU Assistant Director Advanced Solutions

2 Our Commitment to You: Everything at Partners Advantage begins and ends with our producers best interests in mind building loyalty and profitablecustomer relationships.

3 Here to serve you 12 hours each day, Monday through Friday with Live Assistance from 7 a.m. Central to 7 p.m. Central One stop shop for all your life, annuity and health business nearly 60 associates at offices throughout the U.S. US Access to more than 50 of the nation s top carriers Fabulous online tools

4 UPCOMING WEBINARS Webinar 2: KEY PERSON INDEMNIFICATION June 16 th 8:00am PST Webinar3 3: EXECUTIVECOMPENSATIONCOMPENSATION August 18 th 8:00am PST Webinar 4: SMALL BUSINESS PENSION PLANNING September 15 th 8:00am PST

5 Opening Cases with a Business Valuation Vl and Buy Sell Review Will Heidbreder, JD, MBA, CPA, CLU Assistant Director - Advanced Solutions Principal Financial Group May 2010

6 While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance products from the Principal Financial Group (The Principal ) are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Principal National and Principal Life are members of the Principal Financial Group, Des Moines, IA No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group. Copyright 2009 Principal Financial Services, Inc. #

7 5 Ws and H Agenda: Who Who(what types of business) to approach? What What do you say? When When is the appropriate timing? Where Where to meet? Why What are the real opportunities? How How do I go about requesting?

8 Business Owner & Executive Solutions

9 Need for Buy Sell Planning A properly p structured buy sell plan can help: Create a market for the business when an owner exits; Minimize discord among owners; Preventunwanted transfers; Fix the value of the business interest for estate tax purposes; and Provide the family with liquidityidit

10 Buy Sell Agreements Accomplish an orderly transfer of a business interest Common ti triggering i events: Death Disability Bankruptcy/Insolvency Divorce Termination of Employment (voluntary and involuntary) Retirement

11 Agreements between Owners Common pitfalls No formal agreement Poorly structured agreement No funding Antiquated t agreements

12 Agreements between Owners Questions to ask Are all possible triggers included? Is business valuation clear, specific, appropriate, continuous? Isa mandatorybuy out required upon death and/or disability? Is disability defined and consistent?

13 Common Types of Buy Sell Agreements Cross Purchase Entity Purchase

14 Cross Purchase Arrangement

15 When to Use Cross Purchase Any type of business entity (corporation, partnership, LLC) Survivor s basis is increased by the purchase price 3 or fewer owners Client wants easy administration Large C corporation with AMT concerns Easy conversion to entity type arrangement

16 Entity Purchase Owner A Owner B Buy-Sell Agreement Buy-Sell Agreement Business

17 When to use Entity Purchase All entity types except sole proprietors Multiple owners Owners withvarying agesand and health C Corporations not concerned with AMT No family attribution issues Step up in basis for surviving owners is not a priority

18 Let Us Help The Principal Financial Group can help! and it s free to you

19 Buy Sell Review Services The Pi Principal i lfinancial i Group offers free buy sell reviews and informal business valuations A Starting Point for discussions with tax and legal advisors

20 What is a Buy Sell Review? A way to open a case with a Business Owner Three reports An InformalBusiness Valuation A Review of Major Provisions of the Buy Sell A Review of Funding Needs A Starting Point for discussions with tax and legal advisors To identify issues or Confirm the agreement meets current objectives

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22 The Business Value Gap Helping to secure the gap between your business s fair market value and your book value

23 Sales Opportunities Buy Sell Existing Buy Sell Plans New Buy Sell Plans Single Owner Businesses Business Protection Key Person Loan Protection Exit Planning Selling the Business Additional Family Protection

24 Sales Opportunities Retirement Bonus Plan Select Reward Plan Investment of Sales Proceeds IRAs Qualified Plans

25 Sales Opportunities Estate Planning Estate Equalization ILITs Have Child Own Policy on Parents Become Financial Professional of Choice for New Management Team

26 Buy Sell Review: The Process Collect Documents Review the Customized Report Discuss and Review Highlights and Recommendations with: The Business Owner Tax and Legal ladvisors COLLECT AND PROVIDE: AGREEMENTS ENTITY TYPE OWNERS FINANCIALS INSURANCE OTHER MATERIALS

27 Reports and Proposals

28 Request for Proposal

29 It s All About the Sales! [ ] the case you worked with our broker K N and I on is I Vision and they are being examined so hopefully this will be a good one thanks to you! I got this deal, thank you for your input. We are doing key man life and DI. Fyi The law firm is having him review an existing nml The law firm is having him review an existing nml contract. 58 year whole life contract, 1.6 mil in cash value, 20 mil face. Something we said must have struck a chord.

30 THANK YOU FOR ATTENDING! Homework: Contact five business owners (new or current clients) and complete Business Succession portion of the business fact finder Be prepared to discuss cases at Webinar 1 follow up Wednesday, June 2 nd 8:00am PST Participant: Rich Finkelstein Director of Advanced Markets ext 139 rfinkelstein@partnersadvantage.com