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A Buy Sell agreement is a legally binding agreement that enables business interest to be transferred to surviving owners should a partner exit the business, typically due to death or disability.

Normally an insurance policy is used to provide the funding to purchase the outgoing owners business interest.

Having the funding in place is one thing, however making sure ownership changes simply, and tax effectively is just as important.

LIFE Financial Planners are well versed in advising business clients on how to structure and establish agreements that allow businesses to continue beyond the loss of an owner. We project manage the involvement of a solicitor to ensure the legal agreements are drafted correctly.

Keeping the Business Running

Whilst the Buy/sell arrangement provides funding to buy out an owner, it is also important to be able to keep the business running should a partner or key employee die or become disabled.

The answer may be Key Person insurance.

The insurance allows your business to be compensated for the loss of a key employee. It may assist you cover expenses whilst finding the right replacement, or compensate the business for loss of turnover and profit. Key employees include sales managers, working directors or any employee with valuable skills or knowledge.

Like Buy/sell insurance, structuring the key person policy is vital to ensure tax effectiveness and efficient transfer of funds.