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Protect Yourself from Painful Partnership Losses
I just returned from Thailand on a phenomenal lifestyle trip. Only there can you chat up a tiger in person.
Have you decided to take the leap into partnership? In this case you, as an owner, are considered a key player in your business and your partner is too. Without one of you the business may suffer and have no future. For this reason both of you must have ‘Key Man’ Insurance and here’s an example of why.
Jerry and Andrew had an equal partnership running a golf shop on a local course for 5 years. They each worked as equal partners and the business was producing a great income for their families. Suddenly Jerry had a heart attack and died leaving Andrew to take care of the business alone.
Still reeling from the loss of his good friend and partner, Andrew received a letter from Jerry’s estate attorney requesting that the business be fully audited as the heirs had a right to half of the value and income of the golf shop. Andrew was already feeling overworked and depressed and now he has a new partnership, Jerry’s heirs. Andrew would soon be ordered to pay out 1/2 of the company value and half of the monthly income to the heirs causing an even bigger strain on what was already a extremely difficult situation.
All of this could have been avoided if Jerry and Andrew had protected their partnership with ‘Key Man’ Insurance. A simple term insurance policy for $100,000 on each partner would have solved both the payment to the heirs and Andrew could have immediately hired a replacement for the loss of Jerry, shifting the running of the day to day operations smoothly, protecting his family wealth and maintaining a comfortable income without incurring financial difficulties.
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