Business Owners Suite · Buy-Sell
Business Transition
A buy-sell plan has two parts. The legal plan is written by an attorney. The funding is what makes it real. One of the most common funding sources is a life insurance policy, so the money to complete the buyout arrives on the day the agreement is triggered rather than years later out of company cash flow.
The Structure
What it does
The agreement names who buys the departing owner's interest, on what terms, and at what valuation. The family of the owner who leaves gets cash rather than a minority stake in a company they do not run. The owners who remain keep control.
What has to be true
An obligation to buy is only as good as the ability to pay. Company cash flow, a bank line, and an installment note are all possible, and all of them arrive after the event. A policy on each insured owner is the one funding source designed to be there the same week.
Where it comes apart
Most failed buy-sells were signed correctly. The company then tripled in value and nobody revisited the number, or an owner was added and never brought into the arrangement, or the funding lapsed quietly. The document and the funding need to be reviewed on the same schedule.
An agreement with no funding behind it is a promise. Funding with no agreement behind it is an accident. Your attorney writes the first half. This practice builds the second, and makes sure the two match.
Begin the Conversation
Thirty minutes, no presentation, no obligation. Bring the agreement if you have one. If you do not have one, that is a useful place to start.
Important: This page is general education. It is not legal, tax, accounting, or individualized financial advice. Buy-sell agreements, split dollar arrangements, deferred compensation plans, and trusts should be drafted by a qualified attorney, with tax treatment confirmed by a qualified tax professional. Life insurance policies contain costs, charges, limitations, exclusions, and conditions; coverage depends on underwriting and on the terms of the policy issued. Guarantees are backed by the claims-paying ability of the issuing insurance company. Video content is produced by the issuing carrier and is presented with attribution.