Your Business

Safeguarding Your Business

For many business owners the vast majority of their net worth lies in their businesses. That is why business owners need to think about and plan for the success of their business.

Events such as death, divorce, disability or bankruptcy of an individual shareholder can wreck havoc on a business and ultimately result in lost revenue and, in some cases, corporate dissolution. Too often, owners do not plan for and address these issues until the event occurs.

We Support privately held businesses

The Power of Insurance

Life Insurance is one of the few assets that is designed to create liquid dollars at just the time they are needed.

Furthermore the liquidity is created with discounted premium dollars and when coupled with the fact that proceeds of a life insurance policy are tax free under current law, it creates a uniquely efficient tool for families to use in their planning.

Further adding to its value as a planning tool is the fact that life insurance can be owned in such a manner that it will not be considered an asset of the estate for tax purposes, yet if structured correctly, it’s
proceeds can be made available to the family for its liquidity needs.

Truly a remarkable set of advantages when directed toward family business transition planning concerns.

Examples where Insurance can be used to satisfy a liquidity need

  • Funding a buy sell agreement among family members
  • Providing a liquid asset to be used to balance passage of a business among operating and non-operating children
  • Survivorship income for non-family spouses and children where business interests are not distributing dividends to family shareholders
  • No catastrophe guaranteeing pay off of business related lines of credit or mortgages
  • Funding executive deferred compensation for non-family key employees to provide a golden handcuff benefit
  • Funding liabilities under Phantom Stock or Stock Appreciation Rights Plans
  • Used as an alternative non-correlated investment asset
  • Funding for estate tax liability upon demise of the business owners to avoid forced sale of the family business
  • A retirement income supplement on a tax favored basis

Resources

The Uniqueness of Family Businesses

Family Business Succession Landscape

Family businesses present unique challenges in creating clarity of direction in passing the business from one generation to the next. 

AUCTORIS has the family business transition plan designed to provide the tools and process for families to create clarity of understanding of their values and vision for the inter-generational passage of their business. This process identifies the impediments and landmines that can cause successful plans to self-destruct.

Landmines such as the federal estate tax, operating and non-operating children, children with varying levels of aptitude for the business and, developing a fair compensation system for children of owners in the business are all challenges that we or our virtual team of advisors assist families in navigating.

Common Obstacles Facing Entrepreneurs

  • Control vs. ownership: When to pass control
  • How to pass the business
  • Over-concentration of assets creating liquidity and diversification problems
  • No catastrophe contingency plan to handle the “Red Beer Truck” event to the owner or key management
  • Attracting, retaining and rewarding key executives to build a strong management team
  • Estate tax issues; step up in basis/installment sale; need for liquidity
  • Retirement
  • The role of estate planning in the succession plan
  • Family involvement
  • What role does the spouse play? If the owner is gone, how is the spouse paid?
  • Non-operating children; treating them all equally

Exceptional People Deserve Exceptional Solutions

M Financial Group

Disclosures

Securities Offered Through M Holdings Securities, Inc. A Registered Broker/Dealer, Member FINRA/SIPC. Auctoris is independently owned and operated. Auctoris is a member of M Financial Group. Please go to mfin.com/DisclosureStatement.htm for further details regarding this relationship.

Check the background of this firm and/or investment professional on FINRA’s BrokerCheck

For important information related to M Securities, refer to the M Securities’ Client Relationship Summary (Form CRS) by navigating to mfin.com/m-securities.

Registered Representatives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.  CA Insurance License #0B71087

This site is for information purposes and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, financial or tax advisor or plan provider.

#5649476.1