Case Study
Client/Challenge:
R & H own and operate a growing chain of automobile dealerships. The business is very profitable and now has 70 employees. No Buy/Sell Agreement is in place and no insurance was arranged to properly fund a buy-out. Both partners are underinsured and paying tax at the highest rates.
Without WEALTHinsurance®:
The family of each partner was at financial risk if something happened to either of them. Surviving spouses would require continuous income and the company would need to fill the void of the former business partner while finding a suitable replacement. The added burden of paying off a surviving spouse through earnings could cause the business to collapse financially. Estate would be left with a large tax liability upon death. Personal holding companies would continue paying tax at more than 50% on investment income.
Outcome:
We eliminated a $4 million tax liability which would have been owed by the families using a comprehensive estate plan developed for both partners. Life insurance and critical illness insurance coverage was arranged to fund their Buy/Sell Agreement in the event of a partner's death or disability. Premiums are paid by the company tax-efficiently. The partners and their employees are now protected by the customized benefit plan we implemented.