The United States has approximately 33.3 million small businesses across the country according to the Small Business Owners Association. A buy-sell agreement plays a major role in protecting businesses when there is a transition in ownership. However, if the buy-sell agreement is not kept up to date, it may not be protecting the business as intended.

Buy-Sell agreements create an opportunity for brokers to provide a value-added service for business owners that can lead to sales opportunities.

Here’s 3 questions to ask the business owner about their buy-sell agreement:

• Is it based on the current determination value of the business?
• Is the funding consistent with the projected current value?
• Does is cover top transition events such as death, disability and retirement?

This is where Source Brokerage, Inc can help.  We help brokers tap into Principal’s business planning services. Principal can provide a fresh look at your client’s buy-sell agreement to ensure it’s protecting your client’s lifestyle and business.

43 percent of business owners have life insurance to fund their succession plan.

Only 16 percent have disability buy-out insurance.

A recent unanimous Supreme Court ruling (Connelly vs. United States) may make succession planning with life insurance more challenging, making it more critical to review current buy-sell agreements to insure they are structured to avoid a higher estate tax.

In addition to buy-sell agreement reviews, brokers can also ask about the business owner’s current individual, business owner expense, and key person disability insurance policies to insure they are in place and provide adequate protection.

See what this former business client learned during the succession process and share the video with your clients to start the conversation.

Offer your business owner clients an Informal Business Valuation and Planning Report that calculates a business value for planning purposes.

Contact Steve Crowe at ext. 222 for all the details or request a quote.