Then in the event of your partner's death or disability, you would purchase your partner's portion of the business at a price determined by your buy-sell agreement
. You would make this purchase with a lump-sum payment from one of your insurance policies.
A buy-sell agreement
should include provisions voiding any attempted transfer of equity that would invalidate the S-corporation election.
In order to avoid internal conflict and a smooth transition in situations where one or all owners desire to leave the business, a good buy-sell agreement
may have any of the following additional provisions:
In choosing your buy-sell agreement
's initial language, consider the tax implications.
* The parties ensure that the buy-sell agreement
includes language defining "critical illness" in the same way as the critical illness policies.
If a key employee from outside the family will likely take over, the business may consider funding the buyout plan with an endorsement split-dollar buy-sell agreement
. (Source: Crump Life Insurance Services)
Further, has the franchisor pre-approved ownership following the operation of your buy-sell agreement
Betti offers the example of an insured buy-sell agreement
. Consider a business with four owners and one dies.
At these meetings, you can update bylaws, cover buy-sell agreements
, and generally take care of business.
4) Buy-Sell Agreement
: If you own your business with others, you need a buy-sell agreement
One of the advisers on the team, Andrew Karlen of the law firm Karlen & Stolzar in White Plains, New York, says that a family business with co-owners generally should have a buy-sell agreement
Parrish: Businesses have a lot going on at any one time, and a buy-sell agreement
has implications beyond just good governance.