Merge Legal Maine Buy-Sell Forms For Free

The business pays the premiums and therefore exists as the owner and beneficiary of the policy. When an employee-owner dies, that share of the company passes to the heirs of his or her estate. Then the business can use the policy's death benefit to buy the interest from the estate.

The four types of buy sell agreements are: Cross-purchase agreement. Entity purchase agreement. Wait-and-See. Business-continuation general partnership.

Here is how buy-sell agreements work: Determine which events invoke a triggered buyout. Establish who has rights and purchase obligations. Identify the names and address of the purchasers. Set a purchase price or valuation with applicable discounts. Establish payment terms as well as their intervals.

If you don't have a binding buy-sell agreement in place, your business is at risk. Without a clear succession plan, disputes can arise among partners?or their surviving spouses?that lead to loss of valuable time, increased expenses, and costly litigation.

The agreement is a legally-binding contract that establishes how the departing owners' shares will be obtained by the remaining partners. Without such an agreement, there can be legal battles and contestation.

The Trigger Events In addition to an owner separating from the business, other triggering events include the passing of an owner, a divorce, a bankruptcy or an injury or disability as well as a material breach of certain contractual or fiduciary obligation of an owner.