Broker Check

Business Planning Success Story

Background:  A CPA Strategic Partner referred 50/50 Owners to discuss ideas and concepts to engage, mentor, incentivize and ultimately groom a key employee as a future partner and ultimate successor.



  • After multiple conversations, it was agreed upon that providing incentives and performance based benefits versus gifting shares empowered the employee to take ownership in their career and allowed actionable steps to future ownership that were earned.
  • It had been years since the owners reviewed their own buy/sell agreement which was currently funded with term life insurance at a generic agreed value. They felt they needed a process to agree upon a valuation moving forward.
  • Their current life insurance policies were not IRS Code 101(j) compliant which could cause the death benefit to be taxable at death should they be audited.
  • Upon review of buy/sell agreement it appeared that the family of whoever died first would receive the least benefit
  • They had a significant amount of cash in the business currently in a money market fund earning very low interest

Our Solutions:

Business Continuity

  • Provide an Informal Business Valuation to give them a mathematical baseline for an agreed value. This opened their eyes to the fact that their business had significant growth and increased in value throughout the years
  • Help them fully fund their buy/sell agreement with new life insurance policies that were IRS Code 101(j) compliant
  • Obtain Disability Insurance coverage funded by bonus, and paid individually by each owner with language in the buy/sell agreement stating that the insurance proceeds would qualify towards paying off the note
  • Facilitated the transfer of the life insurance policies out of compliance to personal ownership

Succession Planning

  • Implement an Incentive Bonus Plan with an informally funded monthly contribution invested with a 5-year time horizon and vesting schedule. At that time the funds will be distributed to the key employee as income providing incentives to remain loyal and a potential down payment to purchase shares in the company
  • Implement a Supplemental Retirement Plan with an informally funded monthly contribution to provide a benefit after 15 years of service that could be used to purchase more shares or supplement retirement income in the future. This would also provide a death benefit to the employee’s family in the case of pre-mature death
  • Provide an employer paid disability benefit to replace the key persons income should they become disabled

Health & Wellness

  • Provide a health and wellness benefit and process for the two owners and key person that rewards for healthy living and promotes longevity

Corporate Asset Management

  • Carve off a portion of the corporate cash to a tax-managed investment portfolio to provide potential growth opportunities

Collaborating with Professionals

  • Presented the recommendations to their CPA and worked with them to identify the tax opportunities and consequences of each strategy
  • Worked with them to select a business attorney that could best help them to update their Buy/Sell Agreement and draft the plan documents for the benefit program