The main line of business is the repair and service of large centrifuges for use in the maritime and oil industries. This Company is owned by two individuals who have been business partners for a number of years. To protect each other and assure the Company would be able to remain in business if either individual became disabled or passed away, a buy/sell agreement is in place where by each partner could buy the other partner’s shares in the business. There is insurance in place to assist in this event when and if it occurs.
Company two operates as a furnace rebuilding business. It has been in business a number of years. It has a good client base and has enjoyed much success. However, the Company’s owner has been diagnosed with Multiple Sclerosis.
In Company number one the insurance that was in place to help with the buy/sale event was in the name of the Company; if the policy paid out, it would create an Alternative Minimum Tax issue for the Business as well as a personal tax for the individuals, should if the policy payout be used for the intended purpose.
The problem in Company number two was twofold. One, the Owner could not get any new insurance; two and the policy that he had in place had large premiums which were becoming difficult to pay due to his medical condition.
Silver Fox Advisor Involvement
A Silver Fox Advisor member who has years of experience in the insurance business was able to help both of these Companies with their respective issues.
In Company number one this Silver Fox Advisor did an in-depth complete review of the buy/sell agreement and the insurance policy; he was able to make suggestions to correct the problem at very little cost to the Business Partners.
In Company number two this Silver Fox Advisor reviewed the insurance policy that was in place and discovered that the policy had a Waiver of Premium clause. Several years of past premiums were able to be covered. In addition, the Business Owner did not have to pay additional premiums’ and the policy remained in force. With these savings, the Business Owner was able to buy insurance to ensure his key employee could keep the business going for his family until they could learn to operate the business or it could be sold.
When it seems as if the best of times have been turned into the worst of times there just may be a silver lining that achieves a happy ending. Silver Fox Advisors and are available to put their expertise and years of real-world business experiences to help you work through your problems.