Is a Buy-Sell Agreement Necessary?

Every business owner should ask themselves one vital question. How would our company continue to move forward in the event of a death, disability, or departure of one of the business owners?
Like a will, a Buy-Sell Agreement spells out how assets and other business interests will be dispersed should an owner quit, become disabled, or die.
Without such an agreement, complications arising from ownership succession may sink any successful company. The remaining owners might be forced to share management and profits with unskilled or contentious outsiders. They may be involved in legal disputes over business assets and liabilities. A firm’s internal quarrels may spill over to customer service, resulting in lost sales. If the firm’s ownership seems doubtful or uncertain, creditors might accelerate collection efforts, bringing unwanted pressure on company resources. Situations such as these illustrate the importance of having a Buy-Sell Agreement in place before the unexpected occurs.

 Funding a Buy-Sell Agreement with Life Insurance

As a partner or co-owner (private shareholder) of a business, you’ve spent years building a profitable company. You may have considered setting up a buy-sell agreement to ensure your surviving family a smooth sale of your business interest and are looking into funding methods. One of the first methods you should consider is life insurance. The life insurance that funds your buy-sell agreement will create a sum of money at your death that will be used to pay your family or your estate the full value of your ownership interest.
As a business owner engaged in a partnership, it is vital to have a Buy-Sell Agreement in place. It is also very important to review your Buy-Sell Agreement as the value of your business changes. If you are a partner interested in setting up a Buy-Sell Agreement or in assessing your current agreement, give Ion Insurance a call today at 203.439.2815.