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- For Business Families
- Corporate-Owned Life Insurance & the Capital Dividend Account (“CDA”)
- Corporate versus Personally owned Life Insurance
- Life Insurance to fund capital gains tax liabilities
- Life Insurance to fund buy-sell agreements
- Life insurance to protect the value of the key persons
- Life Insurance to fund Succession Plans
Life Insurance to fund buy-sell agreements
If there a number of shareholders it is prudent to have a buy-sell provision clause in the shareholder agreement. This clause generally provides for a trigger mechanism based on an agreed formula to value the entire enterprises in the event of death, disability, disagreement and other provisions and for shareholders to buy or sell their shareholdings under certain conditions at an agreed on price based on their percentage share ownership.
This could create a liquidity event to the existing owners and it is generally recommended to fund this agreement with life insurance.