“Ask Your Attorney” Column
About How A Buy-Sell Agreement Can Help You
Dear Counselor: My husband and I own a business with two other couples. We’ve had it for many years, and after a lot of hard work, it has paid off and is now doing quite well. Last week a friend asked me what would happen if one of the other couples were to die in an accident. I never thought about it before. My friend said we should consider a “Buy-Sell Agreement” but I don’t know what that is, or if we should consider one.
Dear Client: The purpose of a Buy-Sell Agreement in a business setting is to address potential problems before they occur. Dealing with issues such as the death of an owner, before a death occurs, allows the owners to figure out what is fair to all concerned while everyone is still alive and can discuss their feelings. Then, the “Buy-Sell Agreement” is written to provide for the business (or the other owners) to be able to buy back the ownership interest of a deceased owner, at an agreed price and on agreed terms (so future disputes are avoided to the extent possible). It can be a real lifesaver for the surviving owners, and provide a certain benefit for the family of the deceased owner. A Buy-Sell Agreement also typically covers situations where an owner goes personally bankrupt, goes through a divorce, or becomes incompetent and can not handle their own affairs. Much anxiety, sleepless nights, time spent in court, and lots of legal fees can be avoided if you all agree how to handle the “what ifs” now — rather than waiting until the day they happen. As business attorneys, we’ve dealt with these issues quite a bit over the years — so when you are ready, come in and let’s talk further.
John L.Maier Jr.