Buy-Sell Agreements
Almost any owner of a closely-held business will benefit from a
funded buy-sell agreement. The business is usually the source of
the owner's income and is most often the largest asset in a
business owner's estate. Death or disability of a business owner
or partner can leave the business partners and their families in
a precarious position.
All types of business entities; sole proprietorships,
partnerships, LLC's and corporations need the solutions buy-sell
agreements provide. Each type of entity has unique problems
which arise from the death or disability of an owner. A buy-sell
agreement can be tailored to provide a solution for each.
A carefully developed buy-sell agreement will:
Create a market for a shareholders stock when it is needed at
the owner's death, disability or retirement.
Establish the purchase price for the deceased, disabled or
retired owner's interest.
Restrict the transfer of stock or interest in the business to
other owners or family members.
Provides liquidity for the payment of estate taxes or other
costs.
Several methods are available to fund a buy-sell agreement:
Use funds from current or future working capital
Borrow funds from a third party
Initiate a sinking fund
Life and disability insurance funding