Unanimous shareholders agreements
Unanimous shareholders agreements (also known as buy-sell agreements)
Do you want to be in partnership with your deceased partner's spouse or advisors?
A buy-sell agreement is a plan that provides for an orderly change of ownership when a business principal dies or becomes permanently disabled.
A buy-sell agreement is designed to establish a value for each principal's interest in the business, by setting out the terms under which the interest will be sold upon death or disability. This way, the ongoing future of the business is secured, and the principal's family is guaranteed a fair cash settlement.
The most cost-effective way to fund a buy-sell agreement is through life and disability insurance. This approach guarantees that the required amount of tax-free capital will always be there when it's needed to buy out a principal's interest.
What will an insured buy-sell agreement help you do?
- Assure creditors and employees that your business will continue should you or one of your business associates die or become disabled
- Guarantee a market for each principal's business interest
- Pre-determine the terms under which you and your business associates agree to buy and sell each business interest
- Provide a fair cash settlement to a disabled business principal without adversely affecting the business' working capital
- Provide the family of the deceased or disabled principal with tax-free guaranteed liquidity
- Help establish the value of each principal's interest for tax purposes
- Provide money to fund the plan at the exact time it is needed
Essential provisions in a buy-sell agreement
- Mandatory agreement to buy and to sell
- Valuation provisions
- Fair market value
- Formula
- Terms of payment upon death
- Buy-out at disability
- Signed and witnessed
- Co-ordination with individual wills
