Questions I always ask business owners about their current financial protection plan.
Who are the shareholders in the business and what percentage do they own?
Are there any inactive owners?
If you died today, what would the business status be at death? Continued by heirs? Sold to surviving owners? Sold to Key Persons? Liquidated?
Do you have a written Buy Sell Agreement?
If there is no Buy Sell agreement, how will remaining owners determine how much to pay your heirs? Will they pay them enough?
If you do have one, what date was your Buy Sell Agreement was last reviewed?
What type of Buy Sell Agreement is it? Cross Purchase Plan? Stock Redemption? Unsure?
What is the approximate value of the business?
How did you come up with thus valuation? (Book Value, Capitalized Earnings, From Attorney or CPA?)
Is the business growing? If so, at what rate?
How do you plan to fund a buyout? (Life Insurance, Sinking Fund, Bank Loan?)
Regarding Key Person Protection & Employee Retention
Who else, other than you, is critical to the operation and proifability of your business?
Do you currently have any protection against the loss of a key employee?
Do you want to retain the key employee(s)? (i.e. through a private bonus, or golden handcuff plan)
If a Key Person dies, would you feel obligated to help provide continued family income with personal life insurance?
Business Debt Protection
How would you repay business debts should you (or one of the other owners) die prematurely?
How much long term debt does the business have? (i.e. Buildings, Land, Heavy Equipment)
How much short term debt does the business have? (Contents of buildings, vehicles, revolving credit line)
Who signed the note at the bank? Owners? Spouses? Business?
Personal Long Term Disability Coverage for Owners
What sources of income will be available to you and your family if you are unable to work due to illness or an accident? What would the impact be on the business?
What is your gross annual income? What is your Spouse's gross annual income?
Any other sources of income? Rentals?
What is your mortgage balance and monthly payment?
How much other personal debt do you have?
Do you plan to pay for your children's education if they decide to go?
Personal Life Insurance Coverage for Owners
Who presently depends on your income? (rule of thumb is at least 10x your income for personal coverage)
Do you have any special needs children?
If you intend to pay for your children's college education, what percent? Will they go to a public or private school?
Do you want to provide continued spousal benefit? If yes, how much income do you want to provide annually?
Do you have any other life insurance? (subtract this amount from your total need that we come up with)
Have you made any specific plans for conserving and distributing your assets when you die?
Do you have a will?
When was your will prepared?
Do you have a trust in effect?
Do you have any anticipated family inheritances?
What is your estimated net worth?
Which of the following estate planning objectives are most important to you? Avoiding probate, minimizing taxes, equalizing the estate among children, provide for spouses, paying of debt, making charitable gifts, providing for grandchildren, providing college education.