What happens to a business partnership when one partner dies? Your business can fall apart if the proper planning and agreements aren’t in place before tragedy happens. Learn how you can protect your business and avoid losing all that you have achieved.
With this option, the surviving owner(s) use cash at the death of a co-owner to fund the buy-sell agreement. But there are several drawbacks:
With this option, the surviving owner(s) borrow funds, usually from a bank, at the death of a co-owner to fund the buy-sell agreement. This, too, has drawbacks:
Purchasing insurance can be a cost-effective funding option for a buy-sell agreement. Typically, a policy is taken out on the life of each owner so that when one owner dies, the surviving partners now have money to buy out the family of the deceased partner. Using insurance as a funding vehicle will provide the following benefits:
Whatever option works best for you, it helps to gather all the facts before you make a decision. Your legal and tax advisors, along with qualified insurance professionals, can help you create an arrangement that best fits your needs.
This material is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.