Craig Hall, The Business Times:
Whether it is your business, your home or your family, these all fall into the category of something you have invested a lot of time, money and effort into and you should have a plan to protect these investments.
“Oddly, it is something that many business owners simply overlook,” says Jamie Lummis, partner in Moody Insurance Agency in Grand Junction, “When in reality business owners should be taking care of exit strategies early on in the life of their business and key employees while their business is building value.”
The fact is that a key employee or partner can die at any time, leaving business owners in a very difficult situation. And in many small businesses, the two are even more intertwined as many owners indeed play both roles. Insurance for this type of incident will help business owners survive the loss of a top salesperson or manager–that causes a drop in productivity, loss of revenue or in a loss of market share–particularly during the time owners need to replace their key employee. Also, key employee insurance can provide the funds needed to purchase outstanding shares from a deceased partner’s family to consolidate a business after the loss of a partner.
“These are main factors used in determining how much insurance your business may need based on its particular exposure to this kind of event,’ says Lummis, “But to help determine your business’ particular needs, it is always best to discuss your situation with an agent.”
Another area of concern for business owners comes in passing along their business and personal portfolio to their heirs as they get older or if they pass away, and it too has an over looked aspect, just like key employee insurance.
“Most people fear how the estate tax will affect their estate but in reality, it is the cost of long term care that will affect them much more,” says Billie Castle, an attorney whose practice emphasizes elder law. “And with nursing home costs averaging in excess of $6,300.00 per month it is something everyone should be looking at.”
It is likely that most people will require long-term skilled care at some point in their lives whether it is in home care, assisted care or care in a nursing home. Also for most people, Medicaid benefits will be needed to help cover these costs. What’s important to know is just how much in assets a recipient can own based on their marital status, what kinds of assets are exempt from being counted, and how to take countable resources and make them exempt.
“Many people need to understand that they can invest in their home, personal property or make prepaid funeral arrangements and that these are exempt,” says Castle, “And fortunately, it is possible to plan for the probability of how much long-term care someone may need and plan accordingly.”