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Welcome to Fortune Financial

Fortune Financial is a team of seasoned financial professionals who provide personalized, goal-based strategies and advice for individuals, corporate executives, business owners and their families. Our group offers specialized expertise in developing comprehensive, results-focused financial strategies designed to enable you to efficiently pursue long-term financial success.

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Business Succession Planning

The death of a partner or major stockholder in a business can have devastating effects on both the business and the deceased partner’s surviving family. The business is concerned with gaining control of the deceased partner’s interest at a fair price so that it can continue operations without interference from the surviving family members. The family members are most concerned with receiving as much money as possible for their interest in the business and for capital that may be needed for estate settlement purposes.

 

The Need for a Written Agreement

Absent a written agreement, the competing interests of the business and the family members could lead to major conflicts, litigation and possibly the forced liquidation of the business.  A buy-sell agreement can ensure that the business interest of the deceased partner will transfer in an orderly manner to the benefit and satisfaction of all parties. With a buy-sell agreement in place, the stability of the business for it clients, employees and investors (or creditors) is more assured.

Key elements of a buy-sell agreement include a mutually agreeable sales price and terms of the sale. The agreement needs to be funded in order to ensure that the capital is available at the time of the death of a partner. Life insurance provides a cost effective means of creating the capital necessary to buy out the interests of the family and establish a reserve for the business to use  to continue its operations.

 

Types of Business Owner Buy-Sell Arrangements

Entity Plan: Under this arrangement, used when there are multiple owners, each of the business owners has a separate agreement with the corporation or partnership as the entity. The entity, per the buy-sell agreement, will buy the deceased partner’s interest at his or her death. 

Cross Purchase Agreement: Used in situations where there are two or three owners, a cross purchase agreement is established between each of the owners. At the death of one of the owners, the surviving owners agree to buy a proportionate share of the deceased owner’s interest.

Buy-Sell arrangements are a simple, yet effective way for business owners of privately held companies to prepare for the orderly transfer of business interests where two or more owners are actively involved in the business. In addition to securing the needs of the surviving family members and ensuring the continuation of the business, a buy-sell arrangement also ensures each owner that there is a buyer for their business interest at a fair price.

Business succession planning involves legal, tax and personal financial issues. Guidance from a qualified attorney or tax professional is strongly recommended.

For more information on business succession planning, contact us today.

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Minnetonka, MN
55343 United States

  •  Tel: (952) 908-2500
  •  Fax: (952) 908-2501
  •  jq@fortunefin.com

This website may contain articles or information that is a general discussion of federal tax laws and strategies that may benefit a taxpayer. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. Financial professionals do not provide tax or legal advice. Taxpayers should seek the advice of their own advisors regarding any tax and legal issues specific to their situation.

Fortune Financial, an affiliate of North Star Resource Group, both of which are independently owned and operated offer their own suite of products and services entirely independent of Securian.

Certain individuals associated with Fortune Financial are registered with and offer securities and investment advisory services through Securian Financial Services, Inc. ("Securian"), a registered broker-dealer and investment adviser, member FINRA/SIPC. . Individuals registered with Securian are authorized to offer only those securities and investment advisory services that have been specifically approved by Securian. FINRA's BrokerCheck contains additional information about registered individuals and also indicates whether they are registered representatives and/or investment advisor representatives. You may also refer to their individual bio pages on this website to find their registration status. Not all registered persons are registered as investment advisor representatives.  Only registered persons who are registered as investment advisor representatives use titles "advisor" or "financial advisor" and provide advisory services. For further questions about which individuals associated with Fortune Financial are registered with Securian, as well as information about which securities and investment advisory services such individuals are authorized to offer on Securian's behalf, please contact Securian at 1-800-820-4205.

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