Members of partnerships should also consider different types of insurance. If you or someone you know is a member of a partnership another useful instrument they might want to take advantage of is a life insurance policy for the co-owners that names other members as the beneficiaries. The proceeds received from the policy can ensure the surviving member(s) can afford the cost of a buyout or afford to keep the company running.
Additionally, disability insurance can provide business owners’ families protections in the case of incapacitation or if a disability prevents the insurance holder from working.
An example would be if a surgeon gets hurt and can’t use his hands.
His/her family is most likely accustomed to a certain lifestyle due to the income that is “assumed” to be coming in each month. If this income stream stops due to a disability, the disability insurance policy will “kick in” and provide the family with income until the surgeon gets better.
If the surgeon does not get better, this insurance can continue to provide long-term disability insurance as well depending on the terms of the policy. Insurance is one of those products that you never want to use but if the time comes when you have to, you will be glad you bought it.
Key man/woman life insurance should also be considered.
This insurance product is used to protect a very important person in the case they pass away or are incapacitated. In that situation, the company, assuming they bought key man life insurance, would receive insurance payouts for monetary loss to the business and the salary expenses to replace this key person.
A last note about estate planning for business owners:
When you die, you cannot take your money with you, but that does not mean you should just throw it away. Dying without a plan in place leaves your business vulnerable to excessive taxes and allows your enterprise to be divided in a manner instructed by the state, not you.
You want to have a plan in place to safeguard the capital remaining within your company and to protect your heirs.
How terrible would it be for you to pass away, giving your company outright to your heirs and all of a sudden a creditor’s claim comes in and takes everything? Use estate planning tools such as trusts to avoid probate and protect your assets.
If you are determined to continue the growth and success of your business after you pass away, do not allow it to be crippled by preventable taxes and fees levied against it.
Work with a professional who understands business and estate planning in your state.
Continue to protect and provide for your legacy, even after you are gone by planning accordingly. Remember, you can’t plan for your death after you die!
If you would like to discuss more protections for you, family member or a friend, please set up a FREE consultation by calling (407) 636-4066, emailing firstname.lastname@example.org, or filling the contact form out HERE.