INSURANCE

BUSINESS:

KEY PERSON EVALUATION:

Profits directly attributable to person’s effort.
Additional compensation necessary to replace.
Recruiting and significant training costs to find or create a replacement.
Lost revenue anticipated

BUY-SELL AGREEMENTS

Provide for transfer of deceased person’s ownership interest.
Establish an agreed-upon method of valuing the interest.
Facilitate the continuation of the business despite the termination of the deceased person’s ownership.
Establish the desired method of financing the ownership interest transfer(s).
Provide an equitable method for terminating the interest of nonparticipating heirs.

BUSINESS CONTINUATION

A death of a general partner dissolves the partnership.
It is seldom practical for the widow(er) or heir to become a member of the reorganized partnership.
To avoid this impasse a Buy-Sell Agreement is important.
A Buy-Sell Agreement obligates the deceased partner’s estate to sell his/her interest to the surviving partners.