do not put content on the brand signature area ©2014 voya services company. all rights reserved....

©2014 Voya Services Company. All rights reserved. CN0830-12154-0916

Business Protection Planning


Disclosures

2

The Voya™ Life Companies and their agents and representatives do not give tax or legal advice. This information is general in nature and not comprehensive, the applicable laws change frequently, and the strategies suggested may not be suitable for everyone. You should seek advice from your tax and legal advisors regarding your individual situation.

These materials are not intended to and cannot be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matter addressed in this document. The taxpayer should seek advice from an independent tax advisor.

Life insurance products are issued by ReliaStar Life Insurance Company (Minneapolis, MN), ReliaStar Life Insurance Company of New York (Woodbury, NY) and Security Life of Denver Insurance Company (Denver, CO). Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted and its products issued. All are members of the Voya™ family of Companies.

All guarantees are based on the financial strength and claims paying ability of the issuing insurance company who is solely responsible for all obligations under its policies.

©2014 Voya Services Company. All rights reserved. CN0830-12154-0916 3

You’ve Invested a Lot in Your Business

Your Business

Time

Money

Passion


Level One: Day-to-day operations

– Keep the doors open

– Attract customers

– Make sales

– Minimize costs

Two Levels of Decisions



Level One: Day-to-day operations

Level Two: Strategic planning

– Long-term direction

– Long-term focus



Hard to find time to make strategic decisions

Two reasons to keep current– Your business is a

valuable asset

– Your business can help increase your personal net worth


I can help you with some “Level Two” decisions

My experience may help you:– Protect your business’ value

– Use business dollars to potentially build your personal net worth

I Can Help


Your business is like a “goose that lays golden eggs”

You protect the goose so the golden eggs can keep coming

Your business interest is likely your most valuable asset

A decrease in its value could have a big impact on your life

Protecting Your Business’ Value


Protecting Your Business’ Value

Protecting your business is a four-stage process:

1. Determine how much it is worth

2. Identify the events that could harm it

3. Develop effective contingency plans for these threats

4. Back up your plans with adequate resources


Protecting Your Business

Plan for normal business calamities

Plan for unexpected events:

– An owner’s death

– An owner’s disability

– Death or disability of a key employee

– Losing a key employee to a competitor


Your business is your most valuable asset; it provides your financial foundation.

What financial aspects of your business keep you awake at night?

What concerns you most?


Suppose you died in an accident on the way home from work tonight.

Do you have a plan in place to protect your family and your business?


Suppose You Die Unexpectedly

There is a plan:– What does it say?

– When was it created?

– What value does it place on your interest?

– Is there enough money backing it up?

– Does it make sense today?

There is no plan:– Who makes decisions?

– Will customers stay loyal?

– What will happen to your business interest?

– Will your key employees stay or be hired away?

– How much business value will disappear?


Suppose you don’t die in the accident but instead are permanently disabled.

Do you have a plan in place to protect your family and your business?


Suppose You Become Disabled

There is a plan:– What does it say?

– When was it created?

– Who will do your job?

– How long will your salary and benefits continue?

– Is there money backing up the plan?

There is no plan:– Who will do your job?

– Will customers stay loyal?

– Will your key employees stay or be hired away?

– What will be the impact on profits?

– How much business value will disappear?


If something happens to you, do you want to leave your future and your business’ future to chance?


Suppose you want to (or have to) retire.

Do you want to be able to create additional resources by selling your interest in the business?


Suppose You Have to Retire

There is a plan:– How does it work?

– Does it still make sense?

– Is it in writing? When was it last reviewed?

– What value does it put on your interest?

– Is there money backing up the plan?

There is no plan:– Who’ll buy your interest?

– What will be the price?

– Where will the money come from?

– Could this create conflict among family members?


Protecting / Motivating Your Key People

You probably have special employees whose skills are critical to long-term profitability

Your economic security may depend on their commitment to stay with the business

The unexpected loss of a key employee can reduce business value and profits for years

Key employees are among valuable assets


Smart Business Owners Carefully Manage Key Employees

There is a five step process:

1. Identify your key employees

2. Quantify the value they bring to your business

3. Understand their individual wants and needs

4. Customize individual incentive packages for them

5. Fund these incentives to recover the costs


What would it mean to your business if your most valuable employee died or became disabled?

Key employees are often taken for granted.


A Key Employee’s Death or Disability

There is a plan:– How will the work

be re-allocated?

– How long will it take to find a good replacement?

– How long until he/she is up to speed?

– How long will pay continue?

– What will the impact be on revenues and profits?

There is no plan:– Will you have to take over

the key employee’s job?

– Where will you find a good replacement?

– How will you recover the lost revenues and profits?

– What will be the impact on you and your retirement?


Do you want to risk the costs and expenses that come with a key employee’s death or disability?


What would it mean to your business if your most valuable employee was hired away by a competitor?

Losing a key employee can be devastating.


Losing a Key Employee Can Be Devastating

How much harder will you have to work?

How much business will he/she take with them?

How much will it cost to hire/train a new person?

Will the value of your business decrease?

What will be the impact on your plans to retire?


What’s Your Strategy for Keeping Key Employees Loyal?

There is a plan:– What incentives are

you offering?

– Are they backed up with money?

– What impact have the 409A regulations had?

– How are you planning to recover your costs?

There is no plan:– Will you have to take over

those duties?

– Where will you find and train a replacement?

– Will customers follow the key employee?

– Will other employees get upset and leave?


Do you want to risk the costs and expenses that come with losing a key employee to a competitor?


Good Incentive Plans Keep Key Employees Happy and Productive

A well-designed incentive plan does these things:– Recognizes the key employee’s contributions

– Rewards superior performance

– Increases the rewards the longer the key employee continues to produce

– Recovers some or all of the plan’s costs


Good Incentive Plans Keep Key Employees Happy and Productive

Commonly used key employee incentives include:– Section 162 Bonus Plans

– Restricted Bonus (REBA) Plans

– Supplemental Executive Retirement Plans (SERPs)

– Endorsement Split Dollar Plans

– SERP / Split Dollar Combination Plans

– Split Dollar Loan Arrangements


I Can Help You Protect Your Business’ Value

I can help you get the most for the time, money and emotion you’ve put into your business

I can help you protect its value:– Review alternatives for estimating its current value

– Test your contingency plans to make sure they work

– Analyze alternatives for funding your plans

– Help you keep your plans up-to-date


What I Need From You

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To assist you, I need some information:– Organization: What is your business’ legal structure?

– Taxation: What are your business and personal marginal income tax brackets?

– Ownership: Who are the principal owners and what percentage interest does each have?

– Advisors: Who are your legal and tax advisors?

– Current Plans: What have you done so far?


Next Steps

Wise business owners hope for the best, but they plan for the worst

If something happens, they are prepared

Where would you like to start?– Review current business protection plans, or

– Protect against the loss of key employees

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