As a business owner, it is important to protect your business from unforeseen loss of key personnel, while preparing for management transitions and establishing a succession plan. At Hoffmann Hermanson, we generate thoughtful, prudent strategies utilizing key-person insurance and appropriate buy-sell agreements for business owners.
These types of agreements are particularly critical for small businesses, where commonly a handful of partners are responsible for the success and stewardship of the enterprise.
What is key-person insurance?
Key-person insurance is a policy taken out by a business to compensate for financial losses resulting from the death or incapacity of an employee whose knowledge, work, or overall contribution is considered uniquely valuable to the company.
What is a buy-sell agreement?
A buy-sell agreement is a binding agreement between co-owners of a business that governs what happens if a co-owner dies, is forced, or chooses to leave the business. The agreement dictates
who can buy the departing owner's share, the price of the share and the events that trigger a buyout.
An insured buy-sell agreement, (triggered buyout is funded with life insurance on the participating owner's lives) is recommended to guarantee adequate liquidity when the buy-sell event occurs.
Owners of a family business also have a need for estate planning. Visit our estate planning page to find out more.
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