The Advantages of a Buy-Sell Agreement
If you pass away suddenly, a buy-sell agreement makes sure the business stays afloat.
4 Ways Buy-Sell Protects Your Business:
- Life insurance creates a lump sum of cash to fund the buy-sell agreement at death.
- Life insurance proceeds are usually paid quickly after a death, ensuring that the buy-sell transaction can be settled in a timely fashion.
- Life insurance proceeds are usually income-tax free; a C corporation may be subject to the alternative minimum tax (AMT).
- If your policy builds sufficient cash value, your partner can use that money to buy your share of the business if you retire or become disabled.
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