By: Carolyn Sennett Courtesy of ErieSense.com
No one knows what the future holds. As a business owner, would your business survive if something happened to you or a business partner?
Many businesses are the shared dream of two close friends and business partners. That means the business could be vulnerable if one of the owners dies unexpectedly. In this tragic situation, a buy-sell agreement funded by life insurance could save your business.
What is it?
A buy-sell agreement is a contract that facilitates a seamless transfer of ownership when one owner passes away. The agreement defines who will purchase the deceased’s business interest and who is obligated to sell. The agreement also establishes the selling and buying prices. It is most commonly funded through life insurance.
Funding your buy-sell agreement with life insurance is ideal for:
- Protecting the business from the financial impact of the death of an owner.
- Providing funds to purchase the deceased owner’s interest in the business.
A buy-sell agreement can also provide peace of mind for the heirs, who may not be in the position of inheriting an asset they lack the expertise or interest in running. Life Insurance can reduce the likelihood that the business or business assets will need to be sold, often below market value, in order to generate cash to complete the business transfer.
To learn more about a buy-sell agreement funded by life insurance, it’s best to talk with an insurance professional like the Erie Insurance Agent* in your community.
*Erie Family Life insurance products are not available in New York. Neither Erie Family Life nor its Agent representatives give tax or legal advice. Please consult your attorney or tax advisor for answers to tax-related questions.