Steve Austin is sole owner of a successful car dealership, which receives a valuation of $6 million. In order to fund his retirement, he plans to sell the business, which accounts for 90 percent of his personal estate. Unfortunately, Steve hasn’t identified a willing buyer and is concerned about how much he would receive if he sold the business to a third party – its book value is only 30 percent of the recent valuation.
Realizing the sale of the business may not provide the liquidity Steve needs in retirement; his advisor recommends the purchase of a life insurance policy held in a trust. A “Guaranteed-No-Lapse” Universal Life (GUL) policy is an affordable death-benefit-only (no cash value) permanent policy. The GUL will provide a ready death benefit for Steve’s family, in the event of his premature death if he’s unable to identify a successor and fair selling price beforehand. An irrevocable life insurance trust (ILIT) will keep the policy outside of his taxable estate, resulting in more money going to his beneficiaries and not towards estate taxes.
If you don’t have a clear succession or exit plan in place and your business makes up a large portion of your estate, you could be putting your family and company in jeopardy. We at Malleo Financial Services can show you the value and peace of mind life insurance can provide.
For a free consultation, please contact us for an appointment.
*This blog is strictly the opinion of Michael A. Malleo and not those of
ASH Brokerage Corp., nor any of our affiliates.
Malleo Financial Services LLC cannot and will not give any specific tax or legal advice.
Please consult your tax professional or legal professional for such advice.