If your corporation has more than one shareholder, a shareholder’s agreement should include a “buy-sell” provision that provides direction as to what happens on the death or disability of one of the shareholders.
A tax-efficient way to fund a buy-sell agreement in the event of the death of a shareholder is through life insurance. Life insurance provides immediate liquidity for funding the buyout of shares owned by the deceased shareholder’s estate.
Every company that has more than one owner should have an up-to-date shareholder agreement. It is prudent planning to protect the assets you have worked so hard to build.
As owners of businesses that have transitioned through generations ourselves, the advisors at Creative Planning are well equipped to help you navigate through the myriad options you have at your disposal.