Among the commonly used techniques used to Job Function Email List assure that key employees remain with the business during the transition period are employment agreements, nonqualified deferred Job Function Email List compensation agreements, stock option plans and change of control agreements. LEVEL TWO - OWNERSHIP Often, a major concern for family business owners with children who are active in the business is how to treat all of the children equally in the business succession process Job Function Email List. Other concerns for the business owner include when to give up control Job Function Email List of the business and how to guarantee sufficient retirement income.
For example, selling (as opposed to gifting) the business Job Function Email List to the active children results in all children being treated equally and provides the business owner with retirement income Job Function Email List. For those business owners that are not reliant on the Job Function Email List business for their retirement, they can gift the business to the active children, and leave the inactive children non-business assets. If, as a result, the inactive children will not receive an equal (or fair) portion of the business owner's estate, make up the difference by establishing an irrevocable life insurance trust for their benefit. Job Function Email List Simultaneous with the gifting and/or selling of business interests, the new owners should enter into a buy-sell agreement.
A buy-sell agreement is a legal arrangement Job Function Email List providing for the redistribution of shares of the business following the death, disability, retirement or termination of employment (triggering events) of one of the owners. The buy-sell agreement would also set forth the purchase price formula Job Function Email List and payment terms upon the happening of a triggering event. If properly designed and drafted, a buy-sell agreement will create for the departing owner a market for what Job Function Email List otherwise would be a non-marketable interest in a closely held business.