Planning for your client’s success
Our industry’s progression has followed the evolving needs of your clients. Legend believes that in order to stay ahead of the competition, an advisor or agent must first stay ahead of market trends and an ever-shifting regulatory playing field. This is why our innovative team of advanced market and planning experts is committed to providing you with the education, tools, resources, and designs you need to successfully navigate your clients’ estate and business planning.
Case Study One
A business owner was considering a substantial bonus for a key employee, to prevent a competing employment offer. However, he was concerned that the employee might simply take the bonus and still leave the company. This is a common concern for business owners, how to compensate and retain key employees.
How could the business owner successfully address this need while providing the security that they needed of employee retention? They needed to find an agreement between the owner and the employee that could lay out a foundation for when a bonus is received and also a platform for the employee to create a retirement saving account. It also needed to outline a vesting schedule, which would protect the employer should the employee consider leaving.
With help from Legend and their insurance advisor, the employer and employee settled on a Key Man life insurance strategy utilizing an indexed life policy, which will provide permanent life insurance protection for the employee’s family, and also allow a tax free withdrawal of cash value that can be used for retirement. The employee and his family will benefit greatly from the bonus, which renews his loyalty to the employer. For the employer, the bonus is a tax deduction and it gives him peace of mind that his employee will stay with the firm until retirement.
Case Study Two
A small restaurant owner and her longtime friend/employee started a business and grew it into a successful establishment. For the employee’s loyalty and extra work, the business owner decided to offer 15% ownership in the firm. However, the business owner wanted to be sure that if she died, her family would get her financial share of the business while her friend retained ownership.
The business owner and her financial advisor decided that a Buy-Sell arrangement would meet the owner’s needs. The agreement would layout the vision the business owner had for the future of the business, while putting some protection in place for her family.
The owner’s attorney drafted a buy-sell agreement that considered the fair market value of the business and noted the ownership percentages. Once the agreement had been drafted, it needed to be funded. Legend suggested a funding method to include a permanent life policy that would grow in death benefit similar to the growth of the business. Both owners are happy with their plan and comfortable knowing their families will receive the financial benefits of their business.