Business Owner's Playbook - The Hartford

The Emerging CompanyYour Life, Your FutureConversationStartersHelp your advisors helpyou by asking them . . .■ How do I prepare my willand a succession plan?■ How do I plan for myretirement and taxadvantages at this stagein my company’s life?■ How can I structure aretirement plan for myselfand my employees?Can I afford it?Prepare for “What If”Only one-fifth ofsmall business ownershave drafted a legalagreement detailingtheir company’sownership in case ofmarital dissolution.Source: The HartfordBusiness Owners Survey,October 2006Plan for your own andyour family’s future –and the company’s.At this point, you probably aren’tconsidering what your companywill look like after you leave, butyou’ve also come to know andappreciate the power of planningfor the future.Whether or not most of yourresources are tied up in thebusiness, your plan shouldinclude your will, and a buy-sellagreement if you have co-ownersand life insurance. Either way,work with your attorney todetermine how you want yourassets handled in the event ofyour death (and also who willserve as guardian for any minorchildren). It should also detailhow you’d like your businessassets handled.Part of your planning needs tofocus on who takes over after you– if you have determined that thebusiness will continue. Is it yourspouse? A child/children? Oneor more co-owners? Would a keyemployee do the job better andwould a buy-out, or partialbuy-out, be preferable? Discussall of this with family members,co-owners and/or key employees,if any, to gauge their interest incontinuing the business. If there’snobody available or willing totake over the business, you canspecify that the company shouldbe sold and/or how its assetsshould be disposed of (assetsshould be listed individually).All of this should be spelled outwith the help of your attorney.Buy-Sell AgreementIf you have co-owners, andthey wish to continue thebusiness without you,how will your family becompensated for your share?You can work with yourattorney to set up a buy-sellagreement, stipulating thatthe surviving co-owner(s)immediately buy your share,possibly with proceeds ofKey Person Insurance (seeThe Growing Company,Insurance) so that your familywon’t be burdened withconflicts at a later date.This kind of plan should takeinto account the type ofbusiness entity involved(i.e., whether it’s a soleproprietorship, corporationor partnership).10