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First Choice Insurance and Financial Services in Augusta Ga

3108 Peach Orchard Road

Suite 3

Augusta, Ga. 30906

Office: 706-798-8860

Fax: 706-798-8849


Business Succession Planning for Corporate Stock Buy/Sells

The Problem — a Key Shareholder Dies

Management is disrupted - deceased shareholder's stock is passed to his or her estate with full legal title and voting rights to the personal representative and then to the heirs.

The Ideal Solution — an Insured Stock Redemption or Cross-Purchase Buy/Sell Agreement

When an insured shareholder dies, either the corporation or remaining shareholders recieve the life insurance proceeds income tax-free. All or part of the insurance proceeds are used to buy all the stock from the deceased shareholder's estate.

The Advantages — of an Insured Stock Buy/Sell Agreement

To the Corporation and Shareholders:

  • Guarantees that the estate will sell - avoids any unwanted shareholders.
  • Establishes the price.
  • Provides the income tax-free cash to buy, when needed, at less cost than any other method of financing the purchase.
  • Ensures business stability because the plan guarantees continuity of the corporation and its present management.
  • Safegaurds the business futures of all shareholders.
  • Can be arranged to provide retirement income for insurable shareholders.
  • Provides good collateral for credit to meet sudden cash needs.
  • Demonstrates good faith in protecting creditors.
  • Shows an alertness to modern business financing methods.

To the Deceased Shareholder's Estate and Family:

  • Guarantees a purchaser for the stock - provides an immediate market for the decendent's stock.
  • Allows the surviving spouse to stay out of the business. It avoids a situation for which the spouse may be totally unequipped. It avoids a risky venture and allows the spouse to retain dignity by providing income.
  • Guarantees a full and fair share cash price immediately.
  • Can avoid outside appraisals.
  • Provides money for estate settlement and avoids delays and attendant expenses.
  • May set the estate tax value of the stock.
First Choice Insurance & Financial Services of Augusta Succession Planning for Partnerships Chart