Safeguarding your business.
Life insurance is designed to help protect a household from the financial hardships that may follow the untimely death of a primary wage earner. But how will a death affect a small business? One way of safeguarding a business is to create a buy-sell agreement. A buy-sell agreement is a contract between different entities within a corporation to buy out the interests of a deceased or disabled member. A buy-sell agreement also can protect the business from loss of revenue and cover the expense of finding and training a replacement.
Events like the death, disability, or retirement of an owner don’t have to mean the end of the business. Business succession planning can provide for an orderly transition of ownership and business management, during lifetime or at death. One tool used in business succession planning is the buy-sell agreement. A properly designed buy-sell agreement can allow you to keep control of your business until death, disability, retirement, or other specified event. This discussion will provide an overview of buy-sell agreements in general, reasons why you might want to have a buy-sell agreement, and a brief description of each specific type of buy-sell agreement.