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J.Hazelbaker
J.Hazelbaker, Attorney
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Exactly how does a Buy and Sell agreement funded with term

Resolved Question:

Exactly how does a Buy and Sell agreement funded with term life insurance work. Can you get one policy, with average age to cover both parties. If one shoulod die, the money is there to pay to that persons estate and buy them out of the business. I am not sure exactly how it works?
Submitted: 2 years ago.
Category: Legal
Expert:  J.Hazelbaker replied 2 years ago.

J.Hazelbaker :

Hello. Thank you for using JustAnswer.

J.Hazelbaker :

You need to purchase a policy for each individual.

J.Hazelbaker :

There is no all-inclusive policy to cover, for example, the first to die in case like this.

J.Hazelbaker :

Typically, the parties enter into a buy-sell agreement and the company buys the policy on each of the principals.

J.Hazelbaker :

When one passes, the company receives the insurance policy proceeds, which are then used according to the buy-sell agreement. Usually, the purpose is to prevent the surviving principal from having to due business with heirs or creditors. Instead, the surviving partner, in his/her capacity as agent of the business, uses the proceeds to buy the deceased partner's ownership interest out of the estate.

J.Hazelbaker :

The company would then own that interest.

J.Hazelbaker :

You could also purchase life insurance policies on the principals. This would be separate from typical buy-sell agreement policies.

J.Hazelbaker :

Please let me know what follow-up questions you have. If my above responses have been helpful, please click Accept so that I get credit for the time/effort. You may always restart the thread and ask follow-up questions at any time by clicking the “Reply” button at the bottom of the question/answer thread. You can access this thread later in your profile under the “My Questions” tab.

Customer:

Is there any place on line I could get a free copy of a typical buy-sell agreement?

Customer:

When I was in life insurance sales a few years ago there was something called a joint policy, it would average the ages of the people. They were both covered for the buy-sell agreement only.

Customer:

Does that sort of policy still exsist

J.Hazelbaker, Attorney
Category: Legal
Satisfied Customers: 4385
Experience: Attorney and small business owner with 10 years experience in the general practice of law.
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J.Hazelbaker
J.Hazelbaker
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Attorney and small business owner with 10 years experience in the general practice of law.