A Funded Buy Sell Agreement – Is it a Land Mine or a Gold Mine?

Listen To This Post

Imagine you and your partner formed an electrical contracting company.  You, Operations Partner, handle operations, Marketing Partner handles marketing and admin. It’s a beautiful arrangement.  It has worked well for decades.

Their Attorney tells them “You need a funded buy sell agreement.  If one of you dies, how will the company move on?”

“Another legal document? Another fee? And life insurance premiums, too? All money we can invest in the business or pay to ourselves!,” you exclaim!

A big takeaway from COVID is the unexpected will happen and always at the worst time.  Avoiding the future is as impossible as living forever.  The future happens whether we are ready for it or not.

Marketing Partner tragically dies. Their spouse is distraught.  Operations Partner now has a new partner, Marketing Partner’s Spouse.  Spouse knows nothing about electrical contracting and has zero interest in being involved in the business.

Operations Partner now runs the business alone. S/he is fielding calls from the Marketing Spouse and Spouse’s professional representatives.  “Where is my money?  How can I live with no income? You must help me!”

A well-written life insurance funded buy sell agreement will lay out what happens when a partner passes. It avoids these difficult circumstances and can fund a buyout.

What is the smart solution to avoid stress and costs?

Invest in an insurance buy-sell agreement.

Please consult with your CPA and attorney to see the implications for you.