Succession Planning
- Introduction to Succession Planning
- Succession Planning Challenges
- What Should a Succession Plan Include?
- Succession Planning Questions to Ask
- How is Succession Planning Related to Estate Planning?
- Systematic Gifting
- Passing on a Successful Business
- Will Your Successors be Ready?
- Selling the Business to a Family Member
- What is a Buy-Sell Agreement?
- Components of a Buy-Sell Agreement
- Setting a Price for a Buy-Sell Agreement
- Funding a Buy-Sell Agreement
- Cross-Purchase Agreements
- Stock Redemption Plans
- Other Types of Buy-Sell Structures
- Choosing the Right Funding Method
- GRAT or GRUT?
- Family Limited Partnerships
- Replacement Planning
- Other Considerations When Exiting a Business
Stock Redemption Plans
A stock-redemption plan is a type of buy-sell agreement under which the company redeems the shares of a stockholder who is leaving the company due to retirement, disability, or death. Life insurance is the most common way to fund a stock redemption plan.
Stock redemption plans have advantages (easy to implement, cost effective, cash value of life insurance policies can be considered a company asset, etc.) and disadvantages (policy premiums are not tax deductible, life insurance policy cash values may be subject to creditors). They also can raise certain tax issues. It's important to discuss whether a stock redemption plan is the right type of buy-sell agreement for your business with a tax professional and a business lawyer.
Share Article:
Investment and insurance products and services are offered through Osaic Institutions. Member FINRA/SIPC. Marblehead Financial Services is a trade name of the Marblehead Bank. Osaic and the Marblehead Bank are not affiliated. Products and services made available through Osaic are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
Tools & Resources
