How to distribute business assets when only two of the three children work in the family business? Here’s how we worked this one out…….
Situation: A 62 yr-old owner of a medical supply company valued at $5 million is married with three children – two of whom work in the business.
Issue: Upon death, the business will transfer to the two children. However, the client wants to compensate fairly the child who does not work in the business.
Solution: Since the first two children will inherit a $5 million business, we recommended that the third child become owner and beneficiary of a $2.5 million life insurance policy (with death benefit guarantee, of course).
Benefits: The insurance is kept out of the client’s estate and will pass to the beneficiary tax-free. In addition, the child outside of the business is satisfied and the other two children own the business with no contingencies or outside interference.
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