Reviewed by Rocket Lawyer On Call Attorney Corey Carter, Esq
What will happen to your company if your business partner passes away? Will you own it outright or will you share the company with the heirs of your business partner? These are questions most business owners don't know the answer to because they do not have a Buy-Sell Agreement in place. Without a Buy-Sell Agreement, a business can face a world of financial and tax problems if an owner passes away, is divorced, retires, or leaves the company one way or another.
Often described as a "business will" or "business prenup", a Buy-Sell Agreement is an agreement between co-owners of company that governs what will happen to the business if one of the owner's dies or leaves the company. Just like a personal will, a Buy-Sell Agreement includes provisions for death, disability, retirement, divorce, and voluntary and involuntary transfers (including sales and bankruptcy) of the company. The agreement controls how the owners of a business can sell their interests in the business, who they can sell them to, when they can sell them, and how much they can sell them for. Not matter what your business is or who it's with, it's always a smart idea to have a Buy-Sell Agreement in place for the future.
A Buy-Sell Agreement is appropriate for all business entities, including corporations, partnerships, LLCs and proprietorships. The agreement can be created at any time but should be completed when the business is formed or soon thereafter.
Other names for this document: Buy Sell Agreement Form, Buyout Agreement, Buy and Sell Agreement
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