Background: Buy/Sell Insurance is a policy which will provide funding necessary to cover a Buy/Sell Agreement between business partners. A Buy/Sell agreement is a contract between two or more business partners whereby the remaining partners in a business willpurchase an exiting partner’s share should a specific and nominated event occur. Such an event typically is the death of one of the partners. On the death of one partner the remaining partner or partners will purchase the deceased’s share of the business for a predetermined price (or by a predetermined method of calculation), the funding for which is provided for by the Buy/Sell Insurance…
Take for example the situation encountered by Shane and Dean, partners in a business that had exclusive contracts to import and sell exclusive makes of motor vehicles, a dealership that they had built up over 20 years. The dealership had an extensive recurring client list and a high profile reputation in their city, the benefits of which enabled them to live the high life. Despite running such a high profile and profitable business, they had never taken the time out to consult with professional advisers on the establishment of an Effective Succession Plan, nor key business agreements and insurances…
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