What would happen to my business if I were hit by a bus?
We are continually talking to our clients about all aspects of improving their business.
If everyone in business took a moment to stop and think about the time and money that they invest in their business, and they then asked themselves the question –
What would happen to all this if I were hit by a bus?
… in many cases, the answer – for both the ongoing health of the business, and the ability of the ongoing owners to be able to pay a fair and just amount for the affected party’s interest – would be, something dire.
One of the most important pieces of the puzzle for the business owner is a “Buy-Sell Agreement”, or a “Business Succession Agreement” as it is sometimes called.
In short, such an agreement is a legally binding contract between business owners governing what is to happen upon the death or total permanent disability of an owner, and ensuring appropriate insurance is in place as a tax-effective method of funding the exit of a business owner.
A properly drafted Buy-Sell Agreement creates certainty and stability in what can be troubling times. It creates certainty by ensuring that the continuing owners will have the ability to pay a fair purchase price to the estate or for the benefit of the exiting owner. It creates stability by placating the concerns for the financiers of the business. It also ensures the ongoing continuity of the business for the clients, employees and all others who rely on the business.
The drafting of an effective Buy-Sell Agreement often involves a good working relationship between the client’s legal advisors, financial advisors and insurance advisors. Member firms of MSI Global Alliance are well-placed to service their clients in this regards due to the strong links that exist between members.
At Taylor Smart, our lawyers are happy to assist your clients thought the preparation of a tax effective Buy Sell Agreement as part of their business succession plan.
About the author
Glen was admitted to practice in 1997 and his areas of expertise are mortgaging and finance, property, leasing, wills and estate planning, transactional work, revenue law, general commercial, and corporate law. He is a member of the Law Society of Western Australia.