Thinking about getting buy sell agreement in Winnipeg. We can help with all the information you need to make decision. A buy-sell agreement is a contract that provides for the future sale of your business interest or for your purchase of a co-owner’s interest in the business. It is also known as business continuation agreement or simply a buyout agreement.
Under the terms of a buy-sell agreement, you and the buyer enter into a contract for the transfer of your business interest by you or your estate at the occurrence of a specified triggering event. A typical triggering events include disability, retirement, and death.
Generally a buy-sell agreement is fully funded and life insurance is frequently used for this purpose. In the event of a death, the proceeds from the life insurance policy are used to buy deceased’s business interest. It is crucial to note that when a sole proprietor dies, a key employee is the buyer or successor.
The buy and sell agreement requires that the business share is sold according to a predetermined formula to the remaining members of the business or to the company. The deceased’s estate must agree before the interest of a deceased partner can be sold to the company or remaining partners.
If you think that a buy-sell agreement might suit your needs, consult us to find about the pros and cons of setting one up.