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 New York Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company (LLC) with an Option to Fund the Purchase through Life Insurance is an important legal document that establishes the rules and procedures for buying and selling membership units in an LLC. This agreement provides protection and clarity for the members involved, ensuring a smooth transfer of ownership and continuation of the business. Key elements covered in this agreement include the identification of the parties involved, their respective membership units, and the terms and conditions for the purchase or sale of these units. It also outlines the valuation method to determine the unit's purchase price, ensuring a fair market value is established. With the option to fund the purchase through life insurance, this agreement offers an added layer of financial security. The agreement can require each member to have a life insurance policy in place to cover the purchase price in case of their death. This provision ensures that the deceased member's membership units can be bought out promptly without causing financial strain on the remaining members. Different types of New York Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in an LLC could include: 1. Cross-Purchase Agreement: In this type of agreement, each member agrees to purchase the membership units of the other members in the event of their death or withdrawal from the LLC. The funding for the purchase is typically through life insurance policies owned individually by each member. 2. Entity-Purchase Agreement: This agreement involves the LLC itself purchasing the membership units from the departing or deceased member. The LLC usually funds this buyout through a life insurance policy owned by the business or through accumulated capital. 3. Wait-and-See Agreement: This type of agreement allows the remaining members or the LLC to decide at the time of the triggering event (such as death or withdrawal) whether to use the Cross-Purchase or Entity-Purchase method. This flexibility provides room for adjustment based on the LLC's financial situation or changes in the members' circumstances. In conclusion, a New York 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 serves as a vital tool for safeguarding the interests of LLC members. It ensures effective ownership transitions and provides financial protection by incorporating life insurance as a funding method.A New York Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in a Limited Liability Company (LLC) with an Option to Fund the Purchase through Life Insurance is an important legal document that establishes the rules and procedures for buying and selling membership units in an LLC. This agreement provides protection and clarity for the members involved, ensuring a smooth transfer of ownership and continuation of the business. Key elements covered in this agreement include the identification of the parties involved, their respective membership units, and the terms and conditions for the purchase or sale of these units. It also outlines the valuation method to determine the unit's purchase price, ensuring a fair market value is established. With the option to fund the purchase through life insurance, this agreement offers an added layer of financial security. The agreement can require each member to have a life insurance policy in place to cover the purchase price in case of their death. This provision ensures that the deceased member's membership units can be bought out promptly without causing financial strain on the remaining members. Different types of New York Buy Sell or Stock Purchase Agreement between Individual Members Covering Membership Units in an LLC could include: 1. Cross-Purchase Agreement: In this type of agreement, each member agrees to purchase the membership units of the other members in the event of their death or withdrawal from the LLC. The funding for the purchase is typically through life insurance policies owned individually by each member. 2. Entity-Purchase Agreement: This agreement involves the LLC itself purchasing the membership units from the departing or deceased member. The LLC usually funds this buyout through a life insurance policy owned by the business or through accumulated capital. 3. Wait-and-See Agreement: This type of agreement allows the remaining members or the LLC to decide at the time of the triggering event (such as death or withdrawal) whether to use the Cross-Purchase or Entity-Purchase method. This flexibility provides room for adjustment based on the LLC's financial situation or changes in the members' circumstances. In conclusion, a New York 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 serves as a vital tool for safeguarding the interests of LLC members. It ensures effective ownership transitions and provides financial protection by incorporating life insurance as a funding method.
