heavenly finances bni presentation 2014
TRANSCRIPT
The_Funniest_Life_Insurance_Commercial_[www.videograbber.net].mp4
BUSINESS PROTECTION.
4
NUMBER OF BUSINESS OWNERS.
Source: Legal & General SME research, January 2013
85% have 3 business owners or
less
The average age of business owner is 49.5 years old.
Limited Liability Partnerships (LLPs)On incorporation an LLP becomes a legal entity separate from it’s owners (known as ‘members) and has an unlimited capacity to conduct business.
PartnershipsA partnership is the relationship existing between persons carrying on a business in common with a view to profit.
Sole TradersThe simplest entity. The business is inseparable from the individual who sets it up.
5
TYPES OF BUSINESSES.
Limited Companies
A Limited Company has a separate legal existence to it’s owners (shareholders). A limited company is run by it’s directors who may also be shareholders but don’t have to be. The shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own
• WHICH OF THE FOLLOWING WOULD DAMAGE YOUR BUSINESS THE MOST?
• Company car is stolen
• Someone steals the computers
• The photocopier breaks down
• One of the business owners suffer a heart attack
• The courier lets you down
• A window is broken by vandals
• A business owner, director or partner suddenly dies.
Share ProtectionOn the death of a business owner the policy proceeds are paid to the remaining owners to buy the share of the business from the deceased's estate.
Business Loan ProtectionThe policy proceeds are used to help pay off any outstanding loans the business may have..
Key Person - Profit Protection The policy proceeds are paid directly to the business to be used to help replace a Key Person and cover the loss of profits that may occur. The policy proceeds could help the business to continue trading.
7
WHAT IS BUSINESS PROTECTION?
Relevant Life Plan
A tax efficient single life Death in Service benefit for employees or Directors of a business. The policy proceeds are paid to the Trustees (employer) and the benefit is written under Trust for the life assureds’ beneficiaries.
LOSS OF A KEY PERSON
What would be the impact on the business?
• Turnover?
• Cost of sales?
• Overall costs?
• Profits of the business?
9
KEY PERSON.
10
TIME TAKEN TO FIND AND TRAIN A REPLACEMENT?
Almost ¼ believe it would take between 6 and 12 months.
Source: Legal & General SME research, January 2013
11
CORPORATE DEBT.
Source: Legal & General SME research, January 2013
12
TYPES OF CORPORATE DEBT.
Source: Legal & General SME research, January 2013
13
DIRECTOR LOAN ACCOUNTS.
14
SHARE PROTECTION.
Source: Legal & General SME research, January 2013
6 out of 10 had no protection in place.
15
WHAT WOULD HAPPEN IF ONE OF THE BUSINESS OWNERS DIED?
OWNERSHIP - OWN LIFE UNDER BUSINESS TRUST.
Shareholder
Business interest
Cash
Business Interest(Will)
Policy Proceeds(Trust)
(Cross Option agreement)
• Can also be know as a double option agreement.
• Protects interests of both parties.
• Provide surviving owners with the option to purchase deceased’s share.
• Provide estate with the option to sell deceased’s share.
• If either party exercises their option the other must comply.
• Stated timescales to exercise, three to six months.
• Single option agreement can be used for critical illness.
• Retains IHT Business Property tax relief.
17
CROSS OPTION AGREEMENTS.
Banned_Life_Insurance_Commercial_[www.videograbber.net].mp4
RELEVANT LIFE PLAN.
PUT LIFE COVER ON EXPENSES.
20
•
A single life assurance policy which provides ‘death in service’ benefits for an individual to a maximum
age of 75.
It’s designed to provide a lump sum benefit payable either on death or the diagnosis of a terminal illness of an employee during their employment, within the
length of the plan.
WHAT IS A RELEVANT LIFE PLAN?
21
ELIGIBILITY.
Eligible to be a life assured:
• Employees (including directors)
• “Salaried partners”
Not eligible to be a life assured:
• Equity partners• Members of an LLP• Sole traders
22
HOW IT WORKS.
Company
Insures employee
Relevant Life Plan in trust
Trustees make a successful claim
Pay out to individual or charity
Employee dies during the term
or is diagnosed with a terminal illness (except in the last 12 months of the plan)
• Premiums will not be a benefit in kind/ taxable remuneration for the individual employee.
• The lump sum benefits are paid free of income tax
• Any premiums paid do not count towards the individual’s annual pension allowance.
• The benefits are written under a discretionary trust and should be free from Inheritance Tax.
23
WHY ARE THEY TAX EFFICIENT?
Who do I want to speak to?
Accountants
Lettings Agents
Mortgage Brokers
Will Writers
Estate Agents
Solicitors
Calvin
Funny_Insurance_Commercial_[www.videograbber.net].mp4