Donald M. Thompson - Wills, Trusts, and Estate Planning


Buy-Sell (Shareholder) Agreements

These are often used in estate planning when businesses or farms are involved, especially if there are other owners. All the owners agree to buy out the interest of any owner who dies. This provides cash to the estate of the dead owner for what might otherwise be an unsalable asset and protects the other owners against having to deal with a new owner who they may not want. Sometimes these agreements provide for carrying life insurance to pay for the buy-outs. Buy-outs are also frequently provided for under these agreements if one of the owners wants to sell to an outsider or becomes disabled. These agreements are also sometimes used to fix the price at which shares of the business are valued in the dead owner's taxable estate.

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