Pitfalls of Not Having a Buy-Sell Agreement
As we all know, unfortunate events can and will occur in the course of owning and running a closely held business. But are you prepared for when these hard times come?
That is to say, do you have a plan if you or your business partner die, divorce, become disabled, become disqualified from ownership, or depart the company (voluntarily or involuntarily)? Who will legally own and run the business? What will become of your company? Will your surviving spouse pick up the business where you left off?
These are the questions you should ask yourself. If your answer is No or I don’t know, you and your business may be in for a slew of issues—financial and otherwise—should any of those circumstances arise.
How a Buy-Sell Agreement Will Benefit You and Your Business
The great news is you can legally protect yourself and your company from a disastrous aftermath when an owner no longer holds interest in the company, for whatever reason. In fact, a buy-sell agreement has many benefits, such as:
Safeguard against disagreements that may arise between family or co-owners by determining who will subsequently take over ownership.
Ensure business operations continue and are not disrupted.
Avoid entity dissolution and business liquidation.
Minimize the risk that outsiders may take control of your company.
Establish costs to reconcile estate settlement costs and taxes of a deceased owner.
Plan for estate taxes.
Also, a buy-sell agreement is reciprocal, which makes the agreeing during the negotiations more simple and equitable for all parties involved.
How Do I Get a Buy-Sell Agreement?
It’s simple! Contact your business law attorney today.