Supporting the insurance-funded Buy-Sell …

Shareholder agreements are an important ingredient for those entering a corporate arrangement. They not only address the rights and obligations between the corporation and its shareholders, but the agreement can contemplate and provide for specific events which may occur such as the disability or death of a shareholder.

There are various buy-out structures at death that can be provided in an agreement that include the use of life insurance. The structure selected will address when and how the buy- out will occur. It will also lead to different tax and legal outcomes. The client will therefore be relying on their lawyer and accountant to give them advice on how best to structure a buy-out at death. Advisors play a key role in ensuring that the insurance put in place lines up with the structure contained in the agreement.

Sometimes, the professional that a client selects is not always familiar with how insurance can work to accomplish a buy-out at death or disability. To help the professional advisor, you have numerous support materials at your fingertips. These include Tax Topics that discuss the various buy-out structures at death or disability. The Tax Topics provide an overview of the structure of the buy-sell, how the insurance works to fund it and what tax and legal outcomes will occur.

This information is invaluable for your client’s professional advisor. In addition to providing the technical background they need to better understand how the insurance will work with the buy-out, the Tax Topics also contain sample clauses so that the drafter of the shareholder agreement has a reference point. This type of legal resource is not easily found in legal precedents for lawyers and therefore will provide a great deal of assistance to a lawyer drafting the agreement.

Buy-sell sample clauses in the Tax Topics under the Buy-Sell Concept on Repsource provide a quick and easy way for you provide value-added support to both your client and their professional advisors.

Buy-Sell Tools with sample Clauses on Repsource:

Tax Topics:

Corporate Redemption Method

Criss-cross Purchase Method (with and without trustee) Promissory Note Method

Hybrid Method

Disability Buy-Sell: Provisions and Funding

Other Guides:

A Guide to General Insurance Provisions for Buy-Sell on Death and Disability