• International Tax

    Consult with our leading international tax experts today! Read More
  • Making The Complex Simple

    Let our El Paso CPA's make it simple for you Read More
  • El Paso Accounting & Tax Services

    Serving El Paso, Las Cruces, Juarez and surrounding areas. Read More
  • 1
  • 2
  • 3

A buy-sell agreement is a critical component of succession planning for many businesses. It sets the terms and conditions under which an owner’s business interest can be sold to another owner (or owners) should an unexpected tragedy or turn of events occurs. It also establishes the method for determining the price of the interest.

This may sound cut and dried. And a properly conceived, well-written buy-sell agreement should be — it is, after all, a legal document. But there’s a human side to these arrangements as well. And it’s one that you shouldn’t underestimate.

Turmoil and conflicts

A business owner’s unexpected death or disability can lead to turmoil and potential conflicts between the surviving owners and the deceased or disabled owner’s family members. Such disorder has the potential of disrupting normal business operations and can result in instability for employees, customers, creditors, investors and other stakeholders.

A buy-sell agreement ensures that an owner’s heirs are fairly compensated for the deceased owner’s business ownership interest based on a predetermined method. The other owners, meanwhile, don’t have to worry about the deceased’s spouse (or other family members) becoming unwilling (and unknowledgeable) co-owners. And employees will benefit from less workplace stress and disruption than would otherwise be caused if an owner dies or becomes disabled.

Spousal matters

Indeed, among the worst potential succession-planning scenarios is when a deceased or disabled owner’s spouse becomes an unwilling participant in the business. Without a properly structured buy-sell agreement in place, the spouse could be thrown into this situation — even if he or she knows little about the business and doesn’t want to actively participate in running it.

There’s also the less tragic, though still difficult, possibility of divorce. When a business owner and his or her spouse decide to end their marriage, the ramifications on the business can be enormous. A buy-sell helps clarify everyone’s rights and holdings.

Great benefits

Ownership successions are rarely easy — even under the best of circumstances. These transitions can go much more peacefully with a sound buy-sell agreement in place. Please contact us for help with the tax and financial aspects of drawing one up.

© 2017

About the Author

Add comment

This comment platform is ours, but the conversation belongs to everybody. This is a professional services site and want this to be a welcoming space for intelligent discussion, and we expect participants to help us achieve this by notifying us of potential problems and helping each other to keep conversations inviting and appropriate. If you see something problematic in community interaction areas, please report it to us. When we all take responsibility for maintaining an appropriate and constructive environment, the dialog is improved and everyone benefits.

test

 


Security code
Refresh

Call Today! Free Consultation

Phone 915-532-2901 Or Email Us

Latest Tweet

img 03

International Tax Planning

Our team of international accounting specialists are experienced in international business structures, tax planning, and general business consulting.

More info

vision

Outsourced CFO Services

Strickler & Prieto, LLP can provide you with the benefits of a full-time controller or CFO without the full-time expense.

More info

teamwork

QuickBooks Cloud Accounting

Automating the way we work with you to streamline your bill payments, online invoicing, cash flow management, and payroll processing.

More info