No business plan is complete without a shareholder or partnership agreement with buy/sell provisions to allow for the orderly transfer of ownership interests upon retirement, disability, death or disagreement. Business advisors generally agree that life insurance is the most efficient means of providing buy/sell funding on the death of a shareholder or partner.
The premiums on a life insurance contract are generally not deductible for income tax purposes. Therefore, it may be advantageous for incorporated business owners to have the insurance owned at a corporate level in order to have the corporation pay the premiums, particularly where the corporation is in a lower tax bracket than the individual. Otherwise, the money would have to be paid out to the individual and taxed at a higher rate before being available to pay premiums.
Our financial planners can help protect your business giving your partnership and business peace of mind.