Buy and Sell Agreements

What is a buy and sell agreement?

A buy-sell agreement is a legal agreement between the co-owners or shareholders of a business. It is also known as a buyout agreement policy or a business-will that will ensure a smooth transition of business at death.

If a person, who has opted for this policy dies the company or the co-owners would receive the death benefits from the insurance policies so that your business will not interrupt due to your demise. Not only the company but your family will be given cash as payment for your interest in the business.

Types of Buy-Sell Agreements:

Cross-Purchase Plan:

In this plan, Each owner has to pay the annual premium and each the beneficiary of the policy. When an owner dies, other owners will get the death benefit in order to purchase the deceased owner’s share of the business.

Entity Redemption Plan:

In this plan, each and every owner purchases their respective life insurance policies. The business pays the premiums and when an owner dies, his or her share will pass to his or her heirs.

Hybrid Plan:

If an owner go-ahead with hybrid policy, they have to offer their interest to the entity. If the entity declines other owners of the company can purchase the shares.

Benefits of buy-sell agreement:

Buying this policy lets you have the funds when required plus if the cash value is present you can use the funds to purchase your interest in the business if you retire or got disabled. Plus the policy is free from income tax despite who owns the policy.

Go for this agreement with Risk Solutions, the best way to protect whom you care about; it will give the confidence that your family and business will be taken care of after you die, no matter the situation is. Consult us we will help you to get the best agreement possible.

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