Health care CostsIf you retired, died, or became disabled yesterday, who would own and manage your business today?  Would you want your business interest retained for a family, sold, or liquidated?

The buy-sell agreement controls what happens to the company stock upon the occurrence of a triggering event such as the death, retirement, or disability of a shareholder.  A buy-sell agreement is the center of a business continuation plan.  A buy-sell agreement is a contractual agreement between shareholders and their corporation or between a shareholder and the other shareholders of the corporation.  Partner and LLC Members can also have a buy-sell agreement.

Important note: R&R offers free business valuation plans as a complimentary service to any business owner wanting more information about their business and how to ensure it's longevity.

Advantages to Buy-Sell Agreements:

To the shareholders:

  • Determines how the ownership will flow upon the death of a shareholder
  • Eliminates potential conflicts with the heirs
  • Can fix a sale price or establish a formula for the shares

To the family:

  • Provides a guaranteed market for the business interest
  • Provides liquidity for estate taxes
  • Can fix a value or establish a formula for IRS valuation

Types of Buy Sell Agreements:

  • Cross purchase
  • Entity purchase or stock redemption
  • Wait and see plan