PROTECTING A BUSINESS PARTNERSHIP

If a business partner dies, is disabled or decides to exit or retire, a Buy-Sell Arrangement protects the business and remaining owners and allows the business to move forward. Additionally, it helps fix the value of each owner’s business interest.

PROPER FUNDING IS ESSENTIAL TO THE AGREEMENT’S EFFECTIVENESS

It’s important to note that a buy-sell agreement is useful only to the extent it is adequately funded on the date of the “triggering event.” Stone Point can guide your client in the process of developing and funding a buy-sell agreement suited to the needs of their business. The ideal buy-sell agreement is funded and prepared in a manner that is easy for the parties to understand, is reasonably priced, is easily administered, and will not adversely affect the working capital or credit position of the business or professional practice. For most situations, life insurance is the effective vehicle for managing this risk.

PROTECTING YOUR CLIENT’S BUSINESS AGAINST THE LOSS OF KEY EMPLOYEES

The death of a key person can result in serious consequences for your client’s business. Credit could be substantially impaired, or even worse, loans would be called if the key person was a co-signer. The loss of that “intangible asset value” represented by the key person may be greater than that caused by a fire, flood, or other catastrophe.

When insuring a loss through death, Key Person Life Insurance can provide an important source of revenue replacement. Further, the insurance can be designed to accumulate reserves that may be used ultimately for retirement, a termination replacement, or the retraining of successors.

SPLIT DOLLAR PLANS

Many companies design their Key Person coverage as a Split Dollar Plan which has the potential for enhanced tax treatment under the 2017 Tax Act. This is an arrangement between an employer and an employee to share the costs and benefits of a life insurance policy. These plans are widely used in gift and estate planning and can be an important part of the compensation package for key executives.

AN IMPACTFUL WEALTH ACCUMULATION TOOL TO ATTRACT, RETAIN AND REWARD KEY EXECUTIVES

Business owners and key executives face tax issues and retirement saving challenges due to restrictive legislation that dramatically limits the amount of income that can be deferred or contributed to the company’s qualified retirement plan. For this reason, a growing number of companies are turning to nonqualified deferred compensation plans to augment owners’ and key executives’ retirement benefits and overcome many of the regulatory restrictions that apply to qualified retirement plans.

OBJECTIVE ADVICE AND ADVOCACY

As professionals with many years of experience in executive compensation strategies, our role is to serve as an advocate for you and your client—helping your client define their specifications and compare existing programs with their current goals. We help you and your client orchestrate the plan; assemble the required specialists; coordinate arrangements with the advisory team; and guide every aspect of the plan’s development.

Our services include the design, financing and administration of executive benefit programs such as:

• Non-qualified deferred compensation plans
• Supplemental executive retirement plans
• Executive life insurance and disability income plans
• Pre-retirement plan distributions to support funding for college, second homes and other life goals

The intended end result is a custom-built solution structured around your client’s unique requirements—whether it’s:

• Retaining key personnel;
• Restoring executive benefits lost to government limits on qualified retirement plans;
• Rewarding executives and aligning their behavior with the company’s long and short-term goals;
• Recruiting key executives to the company; or
• Retiring executives as part of a well-coordinated succession strategy.