R&R Insurance Blog

Many high net worth business owners are going to be impacted by the Federal Estate Tax – a rate that is higher than the highest Income Tax Rate. It’s a 40% tax on any assets exceeding the Unified Credit level. The IRS has two “Trump Cards” to play that can push you into that tax bracket.

Personal or corporate-owned life insurance can unintentionally bump the values of their estates at the worst possible time – death. The second and potentially even more damaging trigger is pegging the value of their business. They may be operating with the notion that Book Value will be the accepted method used by the IRS. It typically is not. Some combination of Book Value and Capitalization of Earnings is a far more likely method.

Imagine what would happen if your business suddenly had to continue without you, a partner or key employee. The death, disability or retirement of a key executive causes a number of problems which can be addressed with proper planning.

Through R&R, you can make sure that you are covered in case the unexpected happens. Please contact Tom or Pat Driscoll to get more information on R&R's business valuation services and more.  

Are you and your company prepared for the un-timely accident to one of your owners?

If liquidation is forced on a disabled business owner or on the executor of a deceased business owner, it can quickly become public knowledge that there is pressure to dispose of the business, and these results can be anticipated:

• Sale of business assets at greatly reduced prices.
• Elimination of the disabled business owner's or surviving family's primary source of income.
• Sacrifice of any goodwill value that might have facilitated sale of the business as a going concern.
• Difficulty in collecting accounts receivable.
• Immediate demand by creditors for settlement of their claims.
• Possible liquidation of other estate assets to pay business debts.

The liquidation value of a business is unpredictable and may be substantially less than the value of the business as a going concern.

In some situations, the liquidation of a business interest at an owner's death or disability may not be just an appropriate decision. It may, in fact, be the only possible outcome under either of these circumstances:

• The success of the business is completely dependent on the personal skill and experience of the owner.
• There is no successor management in the form of a capable family member, a co-owner, a key employee interested in purchasing the business or an outside buyer.

In these circumstances, the question becomes, "Will the liquidation take place on a forced basis, or will it be planned in advance to allow for the most advantageous disposition possible?"

When liquidation of the business at an owner's death or disability is the only viable alternative, the primary objective should be to plan in advance for an orderly liquidation that results in the greatest possible value for the disabled owner or surviving family.

Contact us for more information on properly protecting your business.