When a shareholder active in the management of a private corporation dies, management is immediately disrupted which may adversely affect the business.  Financial loss may occur and reorganization of management is inevitable.

For surviving shareholders, there are only four alternatives:

1. Reorganize to include heirs in business
    · may be inexperienced, incompatible and unable to contribute to management

2. Reorganize to include an outsider
    · may lack the skills and experience or hold conflicting management ideas

3. Sell out to heirs
    · agreement on a price fair to all may be difficult to reach

4. Buy out the heirs
    · cash to purchase their shares may not be readily available

There is a better solution which would:

 1. Guarantee the heirs the full value of their shares in cash
 2. Guarantee the surviving shareholders full ownership of the business

The plan is simple:

1. Shareholders agree by contract (a "Buy-Sell Agreement") that

    · the shares of any deceased or disabled associate will be purchased by and sold to surviving shareholders in the event of death or disability; 
    · the price, or method for determining it, will be clearly set forth;
    · the method of financing the purchase will be clearly defined.

2. Shareholders create a special fund through business life and disability insurance to finance the Agreement that will

    · provide sufficient cash when needed – immediately and economically;
    · free operating capital for normal business requirements;
    · eliminate additional borrowing or invading of personal resources.

                  Advantages of Business Life and Disability Insurance

To surviving shareholders – Guarantees full and immediate ownership of the business

To the heirs – Guarantees full value of their interest in the business in cash

To the business today – Guarantees business continuity and strengthens its position with customers, creditors and competitors

When a shareholder dies
    · there can be disruption with loss to both the business and the heirs, or
    · there can be smooth transfer of interests at fair value for both the surviving shareholders and the heirs

                       Today the choice is yours.  Which will it be?