Respuesta :
To Fund a buy-sell agreement is considered a valid reason for a small corporation to insure the lives of its major stockholders.
What is a Buy-Sell agreement?
If an owner decides to transfer his interest due to a voluntary event, like retirement, or an involuntary event, such death, disability, insanity, or bankruptcy, it provides a framework for an orderly business succession. If an owner decides to transfer his interest due to a voluntary event, like retirement, or an involuntary event, such death, disability, insanity, or bankruptcy, it provides a framework for an orderly business succession.
- In the case of a partner's death or departure, buy and sell agreements specify how the partner's interest in the firm may be transferred.
- Buy and sell agreements could also lay out how to calculate a company's worth.
- Cross-purchase and redemption are the two types of buy-and-sell agreements that are most frequently used; some agreements mix the two.
- Cross-purchase agreements let surviving owners purchase a deceased owner's or a selling owner's interests.
- Redemption agreements mandate that the company entity purchase the selling owner's interests.
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