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Some Important Questions about Funding Your Shareholder Agreement
- Does your shareholder agreement have specific sections that deal with partner dissatisfaction, partner death, and partner disability?
- Has the disability section of your shareholder agreement been properly integrated with your group or corporate disability program?
- Do you have proper shareholder agreement funding for death and disability? (Many corporations have life insurance in place in the event of a shareholder death, however, many corporations have not resolved the funding requirements for a shareholder disability) Have you?
- Do you have proper funding in place for a partnership disability buyout in the event that a shareholder suffers a severe and prolonged disability?
- Have you explored a "Wage Loss Replacement Plan" to see if your corporation would be eligible for this "taxable" but corporately paid benefit?
- Does your group insurance program conflict with your shareholder agreement? Are you paying disability premiums for benefits that you will not be able to collect?
- Does your shareholder agreement contain specifics on how the valuation of your business will be determined? Do your life insurance and disability insurance contracts reflect the current valuation of your business?
- Does your shareholder agreement specifically state how long a shareholder will continue to receive a salary from the corporation if they become sick or hurt?
- What definition is used in your shareholder agreement to define a disability? Has a third party been appointed to adjudicate possible claims?
- If you have funded your shareholder agreement with life insurance have you been shown the advantages of Universal Life Policies over Term Policies? If you currently have Term Insurance policies are they convertible to Universal Life policies?
If you don't have the answers to these questions, we can help!
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