When a partner in a business dies, the disposition of his or her business interest often creates many problems for his heirs as well as the remaining partners. There are many important issues that have to be dealt with. Who will purchase the shares of the deceased? What is a fair price for his shares in the business? Where will the funds come from?
These problems are easily resolved if a buy-sell agreement has been established.
A buy-sell agreement provides that:
Someone (e.g., the business entity, key employee, or the surviving partners) will purchase the deceased owner's shares at an agreed-upon price.
The deceased owner's estate is obligated to sell the shares at that price.
This example illustrates the need of a buy-sell agreement.
Acme Metric Hammers is a partnership with three owners; George, Howard, and Stanley. If George was to pass away, his shares in the company would be passed on to his son Harry. Harry does not have experience in running the business and both Howard and Stanley dislike the idea of sharing the company with him. It is reasonable to assume that if one of the other two partners passed away, George would feel the same way about their heirs. Setting up a buy-sell agreement will ensure the remaining partners attain full control of the company. It also assures the deceased that his heirs will receive a fair price for his shares.
Where will the funds come from?
All that remains are the funds to purchase the deceased shares. Having to suddenly liquidate a large part of the business to pay off the heirs of the deceased can be very damaging to the company. In the case where a partner passes away, the death benefit will help pay for his shares in the company.
With no money to lay out and with very minimal risk, Life Insurance is the most effective and cost-efficient strategy to help partners plan for the future.
Please contact us today for your no-obligation consultation. We look forward to helping you and your family.
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"On behalf of myself, my brother, and our families - thank you for your assistance, sage advice, and care in helping us arrange life insurance, and assisting us with tax/ estate planning. As fellow business owners and fathers, your understanding of the various complexities involved were invaluable. You always left us with the feeling that while you are happy to make a sale, you actually also care. If you ever need us to speak with potential clients about the service and professionalism you provide, we would be happy and honored to do so. Wishing you much continued success in your core business and new product lines."
Sincerely,
Ben and Dan Berkovits
Co-CEO's
The Home Improvement People Inc.
www.homeimprovementpeople.com
"My business is preparing Canadian Chartered Accountants to pass the American CPA exams. This requires providing candidates with an organized program and the necessary tools to be successful. Mark Halpern organized my estate planning and provided me with the advice necessary to properly protect my family. He educated me as to exactly what my young family's needs were. Mark worked closely with me to ensure that all of the necessary decisions were made on a timely basis. The process was very efficient. I highly recommend Mark to busy professionals who want one-stop shopping for all of their estate planning needs."
Aubrey Glazman, CA, LLB, MBA, CPA, ABV, CBV, CFE
President
U.S. CPA Success
"I've had my share of challenges dealing with insurance companies and different insurance advisors. You came highly recommended and were highly responsive to help us when others were not. Your advice was sincere and recognized our personal circumstances. Your professional advice, knowledge and connections to the key decision makers in the insurance industry, were invaluable in our efforts to get the type of insurance we wanted. We look forward to a long-lasting business relationship."
Lawrence Tepperman
VP Client Solutions
Exchange Solutions Inc.
"Dealing with Mark on insurance matters has been a rewarding and enlightening experience. He shares his expertise with genuine sincerity and absolutely no pressure. I now sleep much better knowing that my family is protected."
Shael B. Eisen
Barrister and Solicitor