What is a Buy-Sell Protection Agreement?
A Buy-Sell agreement is a legally binding agreement between the co-owners of a business. Buy-Sell agreements facilitate the sale and purchase upon a specified event. Events that often trigger the sale of a business include death, disability or retirement of an owner. Buy-Sell agreements are most commonly put in place to protect the business upon the death of the owner. This type of agreement helps to make certain that the business is around for many years to come.
Funding of a Buy-Sell Agreement
Life insurance is often chosen as the funding vehicle for a Buy-Sell agreement. Life insurance policies are taken out on the lives of each co-owner. If one of the owners dies, the surviving co-owners would receive the death benefit from the insurance policy on the other partner who passed away. In turn, the life surviving spouse would receive a sum of money that is equal to the interest of the deceased owner or partner.
Buy-Sell agreements have the capability of taking possible confrontational situations out of play and help insure a smooth transition as a business moves forward.
There are different types of Buy-Sell agreements. Andrew, in conjunction with your other advisors, will help structure a plan that is most suited for you.
For more information about this or another plan or if you have a question contact Andrew @ (516) 485-3311