In the absence of a valid restriction, a member in an LLC may transfer his/her interest in the LLC (usually expressed in membership units ) to anyone. Restrictions on the transfer of membership units are valid if they are not unreasonable. This form provides that the LLC has the right to purchase a members membership units upon his death. The LLC can fund this transaction through a life insurance policy on the members life with the proceeds going to the LLC. The proceeds will then be used to buy the deceased members membership units.
A restriction on the right to transfer membership units is not effective against a purchaser of the unit unless the purchaser knows of the restriction. Such a restriction can be conspicuously noted on the membership certificates.
This form is set up as a Buy Sell Agreement between the LLC and a key member. It applies in the case of the death, disability, retirement or offer of member to sell his membership units during his lifetime.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
A District of Columbia Buy Sell or Stock Purchase Agreement between Individual Members covering Membership Units in a Limited Liability Company (LLC) offers a legal framework for the sale or purchase of membership units within an LLC. This agreement includes an option to fund the purchase using life insurance policies. Here are some relevant details regarding this type of agreement and its potential variations: 1. Understanding the District of Columbia Buy Sell or Stock Purchase Agreement: — The agreement is designed specifically for the District of Columbia jurisdiction, ensuring compliance with local laws and regulations. — This agreement is applicable when individual members of an LLC intend to sell or purchase membership units from other members. — Membership units refer to the ownership interests or shares in an LLC. — The agreement enables a smooth transaction from the standpoint of both the buyer and the seller, outlining the terms and conditions of the sale. 2. Key Elements of the District of Columbia Buy Sell or Stock Purchase Agreement: — Purchase Price: The agreement stipulates the price at which the membership units will be sold/purchased. — Payment Terms: It defines the payment method, such as lump sum or installment payments. — Valuation Method: The agreement may specify how the membership units will be valued, considering factors like book value, fair market value, or appraisal by an independent expert. — Closing Process: It outlines the steps to be followed for a successful transfer of membership units, including any necessary documents to be prepared and executed. — Legal and Financial Obligations: The agreement establishes the rights and responsibilities of both the buyer and seller, ensuring a smooth transaction and proper legal compliance. 3. Variation: Types of District of Columbia Buy Sell or Stock Purchase Agreements with Life Insurance Funding: — Fixed Insurance Funding Agreement: In this variation, the purchase price is funded entirely through a life insurance policy. The buyer purchases a life insurance policy on the life of the selling member, and the death benefit is used as the funding source. — Cross-Purchase Agreement: This type of agreement involves multiple individual members within an LLC. Each member purchases life insurance policies on each other and becomes the beneficiary. In the event of a member's death, the surviving members use the insurance proceeds to buy out the deceased member's membership units. — Entity Purchase Agreement: In contrast to the Cross-Purchase Agreement, the LLC itself purchases life insurance policies on each individual member. Upon a member's death, the LLC uses the proceeds to buy out the deceased member's units. These are some key aspects of a District of Columbia Buy Sell or Stock Purchase Agreement between Individual Members covering Membership Units in an LLC, with an option to fund the purchase through life insurance. The specific terms and conditions may vary based on the unique requirements of the involved parties and the nature of the LLC itself.A District of Columbia Buy Sell or Stock Purchase Agreement between Individual Members covering Membership Units in a Limited Liability Company (LLC) offers a legal framework for the sale or purchase of membership units within an LLC. This agreement includes an option to fund the purchase using life insurance policies. Here are some relevant details regarding this type of agreement and its potential variations: 1. Understanding the District of Columbia Buy Sell or Stock Purchase Agreement: — The agreement is designed specifically for the District of Columbia jurisdiction, ensuring compliance with local laws and regulations. — This agreement is applicable when individual members of an LLC intend to sell or purchase membership units from other members. — Membership units refer to the ownership interests or shares in an LLC. — The agreement enables a smooth transaction from the standpoint of both the buyer and the seller, outlining the terms and conditions of the sale. 2. Key Elements of the District of Columbia Buy Sell or Stock Purchase Agreement: — Purchase Price: The agreement stipulates the price at which the membership units will be sold/purchased. — Payment Terms: It defines the payment method, such as lump sum or installment payments. — Valuation Method: The agreement may specify how the membership units will be valued, considering factors like book value, fair market value, or appraisal by an independent expert. — Closing Process: It outlines the steps to be followed for a successful transfer of membership units, including any necessary documents to be prepared and executed. — Legal and Financial Obligations: The agreement establishes the rights and responsibilities of both the buyer and seller, ensuring a smooth transaction and proper legal compliance. 3. Variation: Types of District of Columbia Buy Sell or Stock Purchase Agreements with Life Insurance Funding: — Fixed Insurance Funding Agreement: In this variation, the purchase price is funded entirely through a life insurance policy. The buyer purchases a life insurance policy on the life of the selling member, and the death benefit is used as the funding source. — Cross-Purchase Agreement: This type of agreement involves multiple individual members within an LLC. Each member purchases life insurance policies on each other and becomes the beneficiary. In the event of a member's death, the surviving members use the insurance proceeds to buy out the deceased member's membership units. — Entity Purchase Agreement: In contrast to the Cross-Purchase Agreement, the LLC itself purchases life insurance policies on each individual member. Upon a member's death, the LLC uses the proceeds to buy out the deceased member's units. These are some key aspects of a District of Columbia Buy Sell or Stock Purchase Agreement between Individual Members covering Membership Units in an LLC, with an option to fund the purchase through life insurance. The specific terms and conditions may vary based on the unique requirements of the involved parties and the nature of the LLC itself.
