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Protecting Your Small Business

Most small business owners know about protecting their family.  It is not an easy topic to contemplate, but small-business owners also need to protect their companies should they suddenly pass away. From specialized insurance to succession planning, small business owners need to put in some planning to ensure their operations can continue running if the owner suffers an untimely death.

Key matters to consider:

Estate planning 
The personal and business ownership aspects of estate planning are frequently intertwined. A recent lawyer survey revealed less than 70 percent of responding small-business owners stated that asset distribution is the most important reason for estate planning. Legal experts believe this process should start when the company becomes profitable. Entrepreneurs should work with their  attorney and independent insurance agent when working through their estate planning.

Less than one-third of small-business owners have a succession plan in place (Pasha Law PC). This omission will leave the company in limbo should the primary owner pass away. The company may often fall into probate should the owner not have completed succession and estate plans, which the business may not survive if forced to temporarily halt operations. Start with mapping out a structure with your lawyer - that will fit financial and liability needs of your business, as well as long-term business goals - followed by building the succession plan with that structure as the foundation.   Businesses should handle succession planning as soon as the business becomes profitable.

Life insurance  
Website All Business argues that insurance policies should include a signed agreement that brings employees, spouses, heirs, stockholders, partners and stakeholders into the mix. The goal  is to ensure everyone be in agreement before the owner or major stakeholder dies, allowing the company to function properly and continuously. Suggestions for making  a "buy-sell agreement" to avoid a range of issues, both with respect to the owner's heirs and the company itself. The agreement should include a key man policy which provides the company enough money to hire a new boss; survive the initial days following death. Additionally, a buy-sell policy within the agreement facilitates the company's purchase of your ownership from your heirs.

Most importantly, small business owners should never attempt to go through these processes alone, a qualified lawyer and an independent insurance agent will have the expertise necessary to guide owners toward the best planning strategy. Ready to start planning?  Call us today to speak to a Life Insurance professional at 919-755-1401.

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