What would happen to your business if a partner or co-owner passes away, becomes disabled, wants to retire or otherwise leaves the business? Protecting a business after the death of a co-owner, shareholder or partner can be accomplished with Buy-Sell Agreements (also known as Continuation Agreements) which are tied to and funded by life insurance policies. The agreement sets out the details of the transfer of the business interest by the owner or co-owner (or his/her estate) upon a certain event -- typically death, disability and retirement. Those details include who may buy the departing partner's share as well as the price of that business interest. The surviving or continuing business owner or partner can rest assured knowing that they are able to purchase that share of the business without interference from other survivors or the estate.
A Buy-Sell Agreement is an important business tool for planning the future of your business. Therefore the drafting of such an agreement should not be taken lightly. Consult an expert in the field such as an appropriately experienced attorney or corporate trustee who can provide you guidance. Your agent can assist you with the life insurance policies that are the funding vehicle for many Buy-Sell Agreements.
*Note: Please seek the advice of your agent and other trusted advisors when considering life insurance to fund buy-sell agreements. There is a wide array of life insurance products available today and it is impossible to cover each in depth here.
*With all life insurance policies any/all guarantees are backed only by the claims paying ability of the individual carrier.