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A buy/sell agreement is a written contractual agreement outlining how a business owner's interest in the business is dealt with if they die, become disabled, suffer a trauma, or want to resign or retire ('trigger events').
If one partner suffers a trigger event, the buy/sell agreement operates to transfer ownership of that person's business interest to the other owners at an agreed price (usually market value).
It's the funding of this transfer that needs to be addressed.
Often small business owners have much of their wealth tied up in their business, which presents problems when it comes time to finding equity to buy out an existing partner or their family. Insurance can play an important role in the process to ensure the right amount of money, goes to the right people, at the right time and ensure control and certainty is maintained for all parties.
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