Benefit Restoration Strategies: Creating Long-Term Value for Companies and their Executives
Fulcrum Partners provides the following case study of a family-owned company that had an outdated shareholder agreement. Further complicating the company’s problems were: (1.) the need to retain certain key employees, and (2.) a pattern of flat earning in recent years.
This case study provides straightforward insights into the problem and its answers. Review the report to see examples of the multiple opportunities created when applying the flexible solutions proposed by the team at Fulcrum Partners.
Overview of Benefit Restoration Problems and Strategies
Summary of: Business Succession Planning; Ownership Transition; and Key Employee Rewards, and how deferred compensation under Section 409A is often the solution.
- Entity stock redemption—fewer shares outstanding—no basis change
- Cross purchase–owners insure each other and buy deceased shares—Basis increase
Split Dollar Life Insurance
- Used often when the person or entity that needs the proceeds does not have the resources to pay for insurance, or as an executive benefit.
- Endorsement method
- Collateral assignment
Estate Tax Planning
- With two generations (or more) involved, we are presented with challenges and opportunities. Challenges primarily are to avoid increasing the senior generations estate without giving up control. Opportunities are to bypass the traditional taxable transfers and thereby legally avoiding estate tax.
Long Term Incentive for Key Employees
- We all know the challenges of retaining and rewarding key people in successful family businesses. How can we help our clients win the war for talent?
You can download the PDF Creating Long-Term Value for Companies & their Executives here.
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photo credit: Aidan Bartos