{"id":16253,"date":"2015-02-06T17:32:18","date_gmt":"2015-02-06T22:32:18","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/02\/business-report-what-if-in-buy-sell-agreements.html"},"modified":"2015-02-06T17:32:18","modified_gmt":"2015-02-06T22:32:18","slug":"business-report-what-if-in-buy-sell-agreements","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2015\/02\/business-report-what-if-in-buy-sell-agreements\/","title":{"rendered":"Business Report: ‘What If?’ In Buy-Sell Agreements"},"content":{"rendered":"\n
\n
\"debra\n<\/div>\n
Debra Verni, principal of the Herzog Law Firm in Saratoga Springs\n<\/div>\n<\/div>\n

BY DEBRA VERNI<\/p>\n

One estate planning tool that can protect
\nyour family and business partners is a buy-sell
\nagreement. This legal document provides
\nowners with the first chance to buy an interest
\nin the company if another owner withdraws
\nor dies. Ideally, these contracts are drawn up
\nwhen a business is launched, but they can be
\nentered into later. However, don’t wait too long.<\/p>\n

If you die without an agreement, it may be
\ndifficult for your heirs to know how to handle
\nimportant matters that could have a significant
\nimpact on the value, continuation or disposition
\nof your business. Further, if your partner
\ndies, you may be stuck with new, unexpected
\npartners.<\/p>\n

Even if you stay with the company for decades,
\nthe time to prevent disputes is before
\nthey occur. Minimize legal fees, as well as
\nsleepless nights, by solving “what if” issues now.<\/p>\n

Ask these questions to determine where you
\nneed professional assistance to prevent future
\nproblems:<\/p>\n

Should the agreement apply only to the current
\nowners? Or should it be binding on all owners
\nthroughout the life of the business entity?
\nShould the agreement be structured as a
\nredemption or cross-purchase agreement?
\nShould the agreement be structured to require
\none party to sell and another party to buy?<\/p>\n

Should the death of an owner cause an
\nautomatic buyout of the owner’s interest or
\nshould his or her family be allowed to remain
\nas an owner? If a surviving family member is
\nallowed to remain as an owner, what rights and
\nobligations will they have?<\/p>\n

Should the buyout price from the estate or
\nheirs of a deceased owner be addressed? What
\nabout the buyout price to a disabled owner or
\nan owner who resigns or is dismissed? An owner
\nwho goes bankrupt? If yes, when should it be
\npaid? What interest rate should the obligation
\nbear?<\/p>\n

Should the agreement provide that a buyout
\nbe funded with life insurance or some other
\ninvestment vehicle?<\/p>\n

If funded with life insurance, what type of
\nlife insurance is appropriate? (For example,
\nterm life, ordinary life, last-to-die, paid-up
\nlife, universal life, whole life or an endowment
\npolicy?) Should a life insurance trust be used?
\nShould owners have the right to transfer
\nor assign to a trust, for estate-tax planning
\npurposes, their rights and interests in the
\nbusiness?
\nShould the spouses of the owners sign the
\nbuy-sell agreement?<\/p>\n

It is better to plan for the worst and hope for
\nthe best, than to have no plan at all. Remember
\ntime is not on your side and if you answer the
\n“what if” questions now, you can rest assured
\nthat your family, as well as your company, will
\nsurvive should something happen to you.
\nVerni is a principal of the Herzog Law Firm
\nin Saratoga Springs.<\/p>\n

Photo Courtesy Herzog Law<\/p>\n","protected":false},"excerpt":{"rendered":"

Debra Verni, principal of the Herzog Law Firm in Saratoga Springs BY DEBRA VERNI One estate planning tool that can protect your family and business partners is a buy-sell agreement. This legal document provides owners with the first chance…<\/p>\n","protected":false},"author":121,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32],"tags":[58,92],"class_list":["post-16253","post","type-post","status-publish","format-standard","hentry","category-legal-accounting","tag-business-reports","tag-legal"],"yoast_head":"\r\nBusiness Report: 'What If?' 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