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Stewart Financial Services
- Protecting Your Financial Health
Buy Sell Agreements
Protect your Business Interests with a Buy/Sell Agreement. If you are a partner in a business or a major shareholder in a company, you should consider drawing up a Buy/Sell Agreement. This type of agreement sets out provisions for what will happen to the partnership or company in the event of the death, disability, retirement, a major disagreement (a non-resolvable dispute) of a partner or major shareholder, a marital breakdown — where an owner’s spouse has, or has become entitled to an interest in the business, personal insolvency of an owner, or any illegal actions by an owner.
| At death or disability, for example, the remaining owners may not want to be in business with the deceased owner's heirs or the non-active disabled owner. As well, the heirs or disabled owner may prefer to receive the value of the deceased owner's share of the business in cash. |
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Or, you may want to set up an agreement requiring the surviving partners to buy out the shares or interests of the deceased/disabled partner. In this case, the estate of the deceased/disabled partner would be obliged to sell to the surviving partners. If an owner retires, an agreement paves the way for business as usual. If owners have a falling out, a Buy/Sell Agreement will enable the business to continue or be "wound up" in an orderly fashion.
A Life Insurance policy is a fundamental part of Buy/Sell Agreements because the policy can provide immediate funds to the surviving partners to buy out the deceased or disabled partner.
Contact Stewart Financial Services for more information about Buy Sell Agreements and other products that can help you protect your business. |
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