Buy/sell funding in case of death

The way share buyback is to be handled, and a methodology to assess the company’s fair market value, are two essential components to be accounted for in any risk management plan in case of a shareholder death.

If this situation happens, the company must have the necessary liquidity on hand to repurchase shares from the deceased’s estate.

A life insurance policy for each shareholder is the most cost-effective way to finance the buy-sell agreement if a shareholder should die. The death benefit amount is paid quickly and can be tax-free.

The value of the life insurance can be higher than that of the shares to offset the impact of the shareholder’s death on business operations.

Learn more about the types of contracts available here.

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