Are you in a business partnership and also busy with your estate planning? Well, don’t forget to think about succession. If you did, maybe it’s a good idea to have your lawyer in Tampa remind you. That’s because your part in the business might make up a major portion of your assets. But what happens if you pass away? How will your shares be passed on to your heirs without throwing the business into disarray? By speaking to your lawyer in Tampa, you will be able to have a sound plan going forward. That’s where a buy-sell agreement comes into play.
Your lawyer in Tampa may suggest a buy-sell agreement for a number of reasons. It could be to determine how succession will go due to retirement, disabilities, or a voluntary exit. However, it can also be applied to estate planning. If you are in a business partnership and pass away, who will inherit your shares and what can they do with it? One option is that they can take over your role or they could sell your share.
Again, this is a very tricky situation because your surviving partners might not be happy with having a newcomer becoming partner. That doesn’t even factor in whether or not your family wants to get involved or if they want to go through the process of finding a buyer. A buy-sell agreement can be the solution everyone is looking for. Through a life insurance policy, each partner can take out a policy on each other. In the event of your passing, the life insurance policy proceeds can actually be used to buy your share from your heirs. This situation is called a cross-purchase plan. Another common solution within a buy-sell agreement is an entity plan. What this entails is that the business itself buys the life insurance policy of each of the owners. Then, when an owner passes away, the business can use the proceeds to buy out the family.
Using a buy-sell agreement can be a win-win situation for everyone involved. But, it is important to speak with your lawyer in Tampa about any concerns you may have. Check out our blog for more tips and info. Contact us today at (813) 448-1042 about meeting one of our lawyers!