The partners are engaged in a particular business and the purpose of this agreement is to provide for the sale by a partner during a partner's lifetime, or by a deceased partner's estate, of his interest in the partnership, and for the purchase of such interest by the partnership at a price fairly established; and to provide all or a substantial part of the funds for the purchase.
Buy Sell Agreement Purchase With Credit Card In King
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State:
Multi-State
County:
King
Control #:
US-00443
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Word;
Rich Text
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FAQ
In establishing a buy-sell agreement, the parties must take into consideration the valuation of the business and equity stakes of the individual owners, as well as the income and estate tax implications of purchasing their stake in the business should a triggering event occur.
As a result of its unique tax attributes, life insurance may also provide significant tax benefits to the departing shareholder, and in the event of death, the surviving shareholders. As a result, life insurance is the preferred funding option in a majority of buy-sell agreements.
Buy/sell agreements use life insurance to fund the transfer of business ownership in the event of an owner's death or disability. The life insurance proceeds provide liquidity to remaining owners or the business, ensuring a smooth transition while securing the financial future of the departing owner's family.
The agreement can be funded by each owner purchas-ing a life and/or disability insurance policy on the life of the other owners. Insurance is often a very efficient method of funding a buy-sell arrangement.
In essence, a buy-sell agreement is a legally binding contract that stipulates how a partner's share of a business may be reassigned if that partner were to die or otherwise leave the business. Buy-sell agreements are commonly used by sole proprietors, closed corporations and partnerships.
Trigger events will determine when your buy-sell agreement will come into play. Common circumstances include the death, disability, retirement or voluntary departure of a partner, but may extend to additional scenarios, such as divorce or individual bankruptcy.
Below are four critical topics you and your lawyer should consider when drafting your company's buy-sell agreement. Identify the Parties Involved. Agree on the Trigger Events. Agree on a Valuation Method. Set Realistic Expectations and Frequently Review the Agreement Terms. About the Author.
