A buy-sell agreement can ensure that the business interest of the deceased partner will transfer in an orderly manner to the benefit and satisfaction of all parties.With a buy-sell agreement in place, the stability of the business for it clients, employees and investors (or creditors) is more assured.Longer life spans can also translate into more health issues that arise in the process of aging.
The agreement needs to be funded in order to ensure that the capital is available at the time of the death of a partner.
Life insurance provides a cost effective means of creating the capital necessary to buy out the interests of the family and establish a reserve for the business to use to continue its operations.
Entity Plan: Under this arrangement, used when there are multiple owners, each of the business owners has a separate agreement with the corporation or partnership as the entity.
The death of a partner or major stockholder in a business can have devastating effects on both the business and the deceased partner’s surviving family.
The business is concerned with gaining control of the deceased partner’s interest at a fair price so that it can continue operations without interference from the surviving family members.