Baby Boomers, A Buy-Sell Market

Baby Boomers, A Buy-Sell Market
Take the case of…
Mr. Boomer, age 59 who is involved in a BUY-SELL Agreement. As a partner, he is obligated to buy out the business interest of another partner in the event of permanent total disability. The firm has prospered and is now worth $4,000,000. His share of the buyout would be $1,333,333.
When the company was new the Buy Out would have been a liability of only $100,000, but even so Disability Buy-Sell Insurance was purchased. It was increased over time and now provides a benefit of $400,000. This falls short of the purchase price by $933,333. Not a comfortable check to have to write! But wait, it gets worse! Next year the plan’s benefits start reducing by $80,000 (20%) per year over the subsequent 5 year period until it drops to zero and then it terminates.
At a younger age this far-off exposure created no personal alarm for he intended to retire at age 60 or 62. His attitude has changed and he plans to work to age 67 or 70, or maybe age 72. But the disability buy-sell continues down its eroding path. What can be done? A RESCUE PLAN IS NEEDED!