Buy-Sell Funding

Funding During A Time When You Need It Most

When you’re starting or growing a business with a partner, composing a buy-sell agreement isn’t as much fun as your next big sales pitch, but it should be a key priority. Buy and sell agreements are commonly used by sole proprietorships, partnerships, and closed corporations in an attempt to smooth transitions in ownership when each partner dies, retires, or decides to exit the business.


What We Offer

Partners in a business commonly purchase life insurance policies on the other partners. In the event of a death, the proceeds from the policy will be used towards the purchase of the deceased’s business interest.

Life insurance is perfectly positioned to provide the liquidity at a time when it is needed most. The very event that prompts the need for money is the very thing that supplies it. Here are the different types of policies used:

Cash Value Life Insurance
  • Creates a lump sum of cash to fund the buy-sell agreement at death
  • Proceeds are usually paid quickly after your death, ensuring that the buy-sell transaction can be settled quickly
  • Proceeds are generally income tax free; a C corporation may be subject to the alternative minimum tax (AMT)
  • Cash value funds can be accessed to purchase remaining business interest following a retirement or disability
  • Additional riders available: critical illness, long-term care, accelerated death benefit, guaranteed insurability, return of premium, and more
Term Life Insurance
  • Creates a lump sum of cash to fund the buy-sell agreement at death
  • Proceeds are usually paid quickly after your death, ensuring that the buy-sell transaction can be settled quickly
  • Proceeds are generally income tax free; a C corporation may be subject to the alternative minimum tax (AMT)
  • Affordable way to fund a life insurance policy
  • Ability to choose the length of the policy to fit your need
  • Additional riders available: return of premium, waiver of premium, accelerated death benefit, term conversion, and more

How It Works

A buy and sell agreement is a legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold to the remaining partners or to the partnership.

Although a mixture of the two is sometimes chosen, there are two common forms of agreements:

Cross-purchase agreement, is when the remaining owners purchase the shares of the business from the deceased and/or disabled partner.

Redemption agreement, is when the business entity buys the shares of the deceased and/or disabled partner.

We will collaborate with your current team of legal and financial advisors to derive an agreed upon value of the business and to prepare any required documents for the buy-sell agreement to be put in place.


Helpful Tools

Life Insurance Calculator is a tool that will help you estimate the amount of life insurance you may need for proper protection.


Ready To Talk?

Click the link below and fill out the contact form to get started. A licensed advisor will contact you directly to complete a free confidential review of your unique situation.

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