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Meet Greg, Nancy, and Zack:
Multiple Business Owners

Meet Greg, Nancy, and Zack: Multiple Buiness Owners

Their Story

Greg, Nancy, and Zack are equal owners in a graphic design firm. In the event that one of them should die prematurely, the surviving two owners want to ensure that control of the business remains with them.

Solutions to Secure Their Future

In order to meet their objectives, each of the three owners enters into a separate legal agreement with the business whereby upon death, the business will buy from the deceased's estate their respective ownership rights.

They have valued the business at $3,600,000, and each of the owner's piece is $1,200,000.

To ensure that sufficient funds will be available for the buyout, the business will purchase life insurance on each of the owners. The face amount of each policy is $1,200,000 – the value of each owner's portion in the business. The business will own the policies, pay the premiums with after-tax money, and name itself as the beneficiary. In the event of death of one of the owners, the business will receive the funds income tax free to purchase the interest of the deceased owner.

Western & Southern Life does not give tax advice. Please contact your tax advisor for information that applies to your situation.


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Last Updated: 12/14/2017