As a business owner, chances are high that you want to protect your income as well as your wishes and intentions for your company, should an unforeseen event happen to you. Two of the strategies that could be utilized (depending on the results of your Comprehensive Company Coach Plan) to help ensure your family’s future, and that of your company, are detailed below:

Wage Continuation Plan

A Wage or Salary Continuation Plan is a vehicle to protect your future income and is especially important if you are not the sole proprietor or owner of your company.

If you are the sole owner, you can direct your company to continue paying you or your family a salary after retirement, disability, or death, without any hesitation or obstacles. However, if there are other controlling owners, it would be good to have an agreement in place that ensures you and your family will be taken care of in case of unfortuitous events.
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In recognition of the value you have contributed to the Company in the past and the contributions you will make to the future success of the business, it is appropriate that you receive compensation from the Company.

A Wage Continuation Plan (or Salary Continuation Plan) can be a helpful tool in allowing the Company to recognize your value today through compensation payments to occur at a future date.

This written compensation plan provides for specific payments to you at defined intervals or dates, most often after your separation from the Company by reason of death, disability or retirement. The payments are subject to standard employment taxes, including ordinary income tax (even if payments are made to your estate or beneficiaries after your death), so its treatment is similar to that of regular compensation but its timing is pushed out into the future.

Stay Bonus Plan

Of equal importance, is the protection of your wishes and intentions for your company after your departure. This can be accomplished through a Stay or Sale Bonus Plan, and will be activated once a sale, transfer or death occurs.

This is especially important if you wish for your company to remain in business, should an unforeseen event happen to you while holding a majority of your company’s ownership.

A Stay Bonus provides your Key Employees with a healthy bonus after they have remained with the company a specified amount of time (typically two to five years) after your planned or unplanned departure, to keep the business running.

This helps type of plan helps to prevent a “fire sale” and allows you to plan for various contingencies in regards to the continuation of your company. This type of plan can be funded either through Asset Protection policies, or sale proceeds.

To find out more about how to incorporate these types of plans into your business growth strategy, you may contact us at any time.

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Links of Interest:

Small Business Strategies

Life Multiplier Tools

Plan First

The Company Coach Story

The Company Coach = The Collaborative Coach