Buy Sell Agreement Insurance Agency

Each purchase-sale contract must be adapted to the particular circumstances of each situation. It can be part of a company agreement or a stand-alone document. Competent legal and tax advice must be used to produce an effective document. Here are some common elements that should contain buy-sell agreements: If your agency has more than one owner, it`s important that they have proper partnership documents. Then there is divorce. Many partnership agreements do not explicitly cover divorce, either because they do not understand its impact on the partnership or because of a simple mistake. It`s easy to ignore this contingency planning, but it`s not a question of if, but when. Planning for death, disability or retirement will not help the Agency work better today. However, good planning allows the surviving family and remaining owners to revise the difficult period with a smoother transition. An agency owner who spends his life starting a business must ensure that the company does not dissolve or sell for pennies on the dollar when they are no longer active. This can be anti-intuitive for some people, but if you can walk into a store, you need to plan how to get out of the business. There can be a lot of options and situations for a single business owner. The number of possible circumstances is multiplied by each owner.

A roadmap out of the pre-agreed terms and measures will help resolve many complications, misunderstandings and disagreements in the future. However, the purpose of this Article shall be addressed to agencies owned by a single person. If the Agency has any form of internal maintenance, the possibility of the death or obstruction of the current owner must be covered by a legal agreement defining the staff who purchase the agency and how. This agreement would allow the Agency to sponsor key man life insurance for the principal with the Agency as beneficiary and owner. This is much easier if the agency is a company or LLC. This key insurance could be used to buy the interests of the owner of his estate if he dies. The agreement should allow the next principal to acquire at least one share of shares, making this new principal the main owner of all outstanding shares in the Agency. Of course, the new head of capital could buy more shares, but why buy more with after-tax dollars if a share makes it the only capital with voting rights? If a new successor appears in the agency, more shares can be purchased by Treasury Stock to ensure majority ownership of the key principle. The Agency pays the premiums of the key man`s policy and either sponsors these costs or lowers the remuneration of the next principal by this amount in order to compensate the agency for the performance of this collaborator in the event of the death of the current owner. The communication can be incorporated into a purchase-sale contract or a separate document….