{"id":108231,"date":"2023-02-06t11:59:44","date_gmt":"2023-02-06t16:59:44","guid":{"rendered":"\/\/www.g005e.com\/?p=108231"},"modified":"2024-08-07t23:09:48","modified_gmt":"2024-08-08t03:09:48","slug":"you-dont-need-this-but-your-survivors-do","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/02\/06\/you-dont-need-this-but-your-survivors-do\/","title":{"rendered":"you don\u2019t need this, but your survivors do"},"content":{"rendered":"

\"\"<\/a>bonus checklists: 16 steps to reviewing a buy-sell agreement and 20 issues to consider.<\/strong><\/p>\n

by ed mendlowitz<\/i>
\n77 ways to wow!<\/i><\/a><\/p>\n

nobody needs an estate plan, exit plan or a buy-sell agreement. but their families and survivors do.<\/p>\n

more: <\/b>due diligence is in the details<\/a> | simple controls can prevent fraud<\/a> | charity directors must take theft seriously<\/a> | forensic techniques can be fraud deterrence<\/a> | the hazards of poor internal controls<\/a> | rule #1: start with cash<\/a> | the priorities were backward<\/a> | how to read a financial statement<\/a> | 77 thoughts about client needs<\/a>
\n\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

estate plans are done so that the remaining family members can have liquidity, minor children will have guardians of your choosing with a dependable cash flow, children won\u2019t fight (too much) over the money, people of your choice will collect and distribute assets and make transfers in an orderly manner, and estate and inheritance taxes can be minimized as can the costs of settling the estate.
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\nsuccession or transition plans don\u2019t matter for the person who drops dead, but not having things in order is very unfair to your family or those who work in the business or who depend on it. there also can be very large costs to wind down a business and close it up. and possibly the owner won\u2019t drop dead but will become disabled and would need cash flow from the business. then, they would really be screwed \u2013 and by their own doing!<\/p>\n

a buy-sell agreement is a will for a business. if an owner drops dead or suddenly is disabled, the lack of an agreement will cause fights between the remaining owners and the dead owner\u2019s family. not \u201cmay\u201d cause, but \u201cwill\u201d cause.<\/p>\n

selfish self-centered boors don\u2019t protect their families by setting things up so that there will be a minimum disruption during a usually upsetting period.<\/p>\n

do it right! get your affairs in order. get the buy-sell agreement or business continuation plan done. pronto!<\/p>\n

clients who are a part-owner of a privately held business need a buy-sell agreement. such an agreement is a will for the business. it is not sensible to neglect having a will, and avoiding suitable arrangements for a business is equally negligent.<\/p>\n

a buy-sell agreement not only protects the owners\u2019 families for the value of their business interests, but also protects the surviving owners because the transfer of the disabled or deceased partner\u2019s ownership will be easier because a method of transfer, payment and terms are established. this reduces or eliminates any unpleasant negotiations between the deceased or disabled owner\u2019s family and the surviving owners.<\/p>\n

these agreements have various names depending upon the nature of the entity, and can be referred to as shareholders\u2019 agreements, buy-sell agreements, members\u2019 agreements or partnership agreements. whatever their name, they serve the same purpose \u2013 to say what happens to ownership shares following a disability or death.<\/p>\n

the agreements can be with the entity or separately with the other owners.<\/p>\n

taxes and sources of cash for the payments would be a consideration to determine the format of the agreement. the business\u2019 accountant is usually the most knowledgeable financial advisor for the owners and can help them work out the best format for their business.<\/p>\n

these agreements can also provide for transfers upon retirement, a desire to leave the business for any other reason, personal bankruptcy, loss of professional license or suspension of practice, conviction of a crime and restrictions of transfer to outsiders.<\/p>\n

if a client does not have an agreement, it is suggested they consider preparing one forthwith.<\/p>\n

they owe it to themselves, their family and partners. if a client has an agreement, good for them, but it should be reviewed periodically \u2013 perhaps initially and then once every two or three years thereafter, or if there are significant changes in the business, cash flow, owner relationships, the need for large borrowing or additional capital in the business for current applicability and values.<\/p>\n

what to do with an existing agreement<\/h3>\n

checklist: 16-item buy-sell agreement review<\/strong><\/p>\n

    \n
  1. obtain a copy of the executed agreement.<\/li>\n
  2. review the agreement for the value or the method of calculating the value.<\/li>\n
  3. calculate the value following the method stated in the agreement.<\/li>\n
  4. compare the calculation to the current financial statement and have a discussion of the validity or applicability of that value.<\/li>\n
  5. project the value in five years using the method described in the agreement.<\/li>\n
  6. review that there is a method to update the value to keep it current.<\/li>\n
  7. review the payment terms and discuss with the client to determine their awareness of whether the business or remaining owner(s) could afford to make the payments.<\/li>\n
  8. determine if the agreement covers death, disability, personal bankruptcy, retirement or someone wanting to leave.<\/li>\n
  9. discuss the definition of disability with the client to determine whether it is clear and objective.<\/li>\n
  10. does the agreement cover an owner getting sick for a prolonged period, i.e., three or four months or longer, and their salary payments or draw?<\/li>\n
  11. if there are more than two owners, does the agreement cover the possibility that two owners might need to be paid out at the same time?<\/li>\n
  12. is there a non-compete agreement?<\/li>\n
  13. remind the owners that either one can be either the buyer or seller irrespective of the differences in age between them.<\/li>\n
  14. have them consider life insurance or disability buyout insurance. each owner should be responsible for their own disability income policy.<\/li>\n
  15. use as a guide the \u201cbuy-sell agreement issues to consider checklist\u201d below.<\/li>\n
  16. if anything is vague it should be recommended that the client consult with their attorney.<\/li>\n<\/ol>\n

    what to do in considering a buy-sell agreement<\/h3>\n

    following is a checklist that can be used at a meeting to advise clients about what should be in the buy-sell agreement.<\/p>\n

    (note that these checklists are provided for instructional and guidance purposes and should be further discussed with clients for business issue purposes and then with an attorney who would also prepare the actual agreement.)<\/p>\n

    checklist: 20 buy-sell agreement issues to consider<\/strong><\/p>\n

    1. parties to agreement<\/p>\n