Buy-Sell Agreements
A Way to Control A Business' Future
Buy-sell agreements are formal business plans that anticipate the disposition or retention of a business interest. They fix a value for a business for estate tax purposes, ensure a family's financial future, and ensure the continuity of the ownership and management team of the business.
How Do They Work?
A buy-sell is a formal written agreement that provides an agreed upon price for the owner's business interest if they retire, become disabled, die, or otherwise have to leave the business.
Buy-sells can be arranged to:
- CONTINUE a business
- LIQUIDATE a business, or
- Leave the CHOICE to family members.
What are the Benefits?
- The IRS is bound to the value set by owner, not its value, for tax purposes.
- A family is assured of funds to use to pay for estate taxes.
- Business partners can be assured of business continuity.
- Employees, customers, and creditors are assured about the future of the business.
What Types of Agreements Are Available?
Redemption Agreements-allows a corporation or partnership to buy the business interest when owner retires, disabled, or at death.
Cross-Purchase Agreements-allows business partner or the remaining shareholders to buy the owner's business interest at retirement, disability, or death, leaving his family with cash instead of the owner's interest in the business.
Wait-and-See Buy-Sell Agreements-gives the best of both worlds. A business partner or the remaining shareholders have an option to buy the owner's interest. If they do not, the business must buy the owner's interest. In either case, owner and his family win.
Trusted Cross-Purchase Agreements-assure the sale and purchase will take place by using a trustee to act on the owner's behalf.
How Can Ameritas Advisor Services Help?
Ameritas Advisor Services has a variety of life insurance policies that may be able to help you implement this concept. For more information call the Ameritas Advisor Services professionals.
These ideas reflect our current understanding of applicable law. Ameritas Life Insurance Corp. and its representatives do not provide tax or legal advice. You should consult your own tax or legal adviser regarding your unique situation.
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