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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 Partnerships

The Problem — a Partner Dies

Management is disrupted - decendent's partnership interest passes 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 Partnership Entity or Cross-Purchase Buy/Sell Agreement

When an insured partner dies, either the partnership or surviving partners recieve the life insurance proceeds income tax-free. All or part of the insurance proceeds are used to buy the deceased partner's interest from the estate.

The Advantages — of an Insured Partnership Buy/Sell Agreement

To the Partnership and Surviving Partners:

  • 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 partnership and its present management.
  • Safegaurds the business futures of all partners.
  • Can be arranged to provide retirement income for partners.
  • 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 Partner's Estate and Family:

  • Guarantees a purchaser for the partnership interest - provides an immediate market for the decendent's partnership interest.
  • 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 partnership interest.
First Choice Insurance & Financial Services of Augusta Succession Planning for Partnerships Chart