Personal Finance 101 – Buy-Sell Planning: Trigger Events and Payment Terms For Buyout

The most fundamental detail of any Buy-Sell Agreement is defining what circumstances will trigger a buyout.  Buyout payment terms should be carefully tailored to each triggering event.  Here are a few common triggering events and some considerations for payment terms. Death. An untimely death is almost universally included in any Buy-Sell Agreement.  Despite being the worst of all possible triggering events, death is actually the easiest event to plan for in a Buy-Sell Agreement.  Life insurance policies in connection with a Buy-Sell Agreement allow an immediate source of liquidity to fund a buyout obligation without burdening the assets or ongoing cash flow of the business.  Given the immediate source of insurance proceeds, a death buyout often occurs as a lump sum payment within a certain time period after the death of the owner.  Immediate payment can also be important for estate tax purposes if the value of the business interest will be included in the deceased owner’s taxable estate and ...

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Did You Just Receive An Inheritance?

At some point in your life, you may receive an inheritance when a family member or loved one passes away.    One of the questions we often get asked about revolves around how to make smart money moves when this type of event happens.    Here are some of the things I would recommend considering if money or property is bestowed upon you. 1. Do Nothing For 60 Days –  When people inherit property, investment assets, or collectibles far too often I see people immediately buy themselves something or sell assets too quickly.    Make sure you take a complete inventory of everything you received, revisit your financial plan, and just simply build yourself a due diligence period before making any concrete decisions.   Allowing this time to pass will give you the ability to make more fact based than emotional decisions. 2. Understand Tax Implications –  Based upon the size of the overall inheritance, you could potentially owe estate taxes which will be ...

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Did the health care bill just crush my taxes?

Scotty, beam me up!   I say this because after reading through the health care bill the taxes that are coming to pay for the plan will make you feel like you are in outer space. If you are high wage earner or a small to medium size business owner that is doing well, now will be the time to begin thinking about your overall tax management plan as your future income taxes could end up skyrocketing to the tune of 60%!  I don’t think people fully realize yet that some tax hikes are in this bill while others are already in motion, and I believe more to come within the next year. First, the top tax rates are scheduled to revert to the 36% and 39.6% number where they were a few years ago from the 33% and 35% number that they are today. (source: www.irs.gov)  If you are in the highest bracket that means you just took a 4.6% ...

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