Maryland Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance

State:
Multi-State
Control #:
US-03467BG
Format:
Word; 
Rich Text
Instant download

Description

In the absence of a valid restriction, a member in an LLC may transfer his/her interest in the LLC (usually expressed in membership units) to anyone. Restrictions on the transfer of membership units are valid if they are not unreasonable. This form provides that the LLC has the right to purchase a members membership units upon his death. The LLC can fund this transaction through a life insurance policy on the members life with the proceeds going to the LLC. The proceeds will then be used to buy the deceased members membership units.


A restriction on the right to transfer membership units is not effective against a purchaser of the unit unless the purchaser knows of the restriction. Such a restriction can be conspicuously noted on the membership certificates.


This form is set up as a Buy Sell Agreement between the LLC and a key member. It applies in the case of the death, disability, retirement or offer of member to sell his membership units during his lifetime.


This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.

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  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance
  • Preview Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance

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FAQ

The life insurance premiums used to fund a buy-sell agreement are not tax deductible. In a Cross-Purchase Agreement where an individual shareholder purchases life insurance on the life of another shareholder and pays the premium, it is paid for with after-tax dollars.

A share purchase agreement differs from a share subscription agreement because a share purchase agreement has a seller that is not the business itself. In a subscription agreement, the business agrees to sell shares to a subscriber.

An ?SPA? is a ?Stock Purchase Agreement.? This is similar to a MIPA, but is used to transfer stock in a corporation, rather than membership interests in an LLC. The key terms in the SPA will include a purchase price, representations and warranties of both parties, and instructions for closing.

Shareholder's agreement is primarily entered to rectify the disputes that occurred between the company and the Shareholder. Meanwhile, the Share Purchase agreement is a document that legalizes the process of transaction of share held between the buyer and the seller.

This is usually referred to as the funding strategy. Buy-sell agreements can be funded through proceeds from life insurance, critical illness, or disability insurance policies. The beneficiary of the policy may be the corporation or the business partners.

One common question we receive when discussing key person benefits is ?What is a buy/sell agreement?? A buy/sell agreement, also known as a buyout agreement, is a contract funded by a life insurance policy that can help minimize the turmoil caused by the sudden departure, disability or death of a business owner or ...

Stock Purchase Agreements: the stock in a corporation is sold to a new owner, often making the new owner or the sole or majority owner. Membership Interest Transfer Agreements: the membership interests in an LLC are sold or transferred, often used when a business partner or member of the LLC leaves the business.

A Stock Purchase Agreement is used for the purchase and sale of outstanding stock of a business. The agreement typically includes purchase and sale terms, representations and warranties, covenants, conditions precedent, termination, and indemnification provisions.

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Maryland Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company - LLC - with an Option to Fund the Purchase through Life Insurance