What is a Buy-Sell Agreement?
A buy-sell agreement is a legally binding contract which protects the welfare of the company’s owners and permits the business to continue in the event of the death, disability, or retirement of a business owner. A buy-sell 
agreement, commonly referred to as buy-sell arrangement, is drafted by an attorney and can be implemented with all forms of companies including, partnerships, limited liability companies, and corporations. A buy-sell plan can be thought of as a written agreement to help a business navigate a successful business transition.
Buy-Sell Agreement Advantages
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Provides a smooth transition and continuity of management and ownership to the remaining business owners. |
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Creates an instant market for a business interest that may not otherwise be saleable. |
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Establishes a fair market valuation for federal estate tax purposes that is binding on the IRS. |
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Spells put the terms of payment and is easily funded with life insurance and disability insurance, if desirable. |
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Provides the liquidity to the retiring owner or to his estate in the event of death. |
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Peace of mind and security for the business, the business owner’s and their families. |
1.Buy-sell agreement is a legal contract drawn by the lawyer that indicates in detail of the parties to the agreement, an evaluation method of the business and method of payment for the following occurrences: 
1. Death.
2. Disability.
3. Disillusionment.
4. Transfer of business interest at retirement.
Buy-sell agreements are used in any types of business including a sole proprietor or partnership. Since these types of business must legally close their doors when the owner or partner dies. The use of buy-sell agreements allow the business to continue while the new owner completes the transfer of ownership without going into debts.
Filed under: Buy Sell
