A buy/sell agreement only works if everybody involved has enough money. Or at the very least, there is a provision for the necessary money in the agreement. You think a basic life insurance policy will take care of that problem? Think again. Simple life insurance is not enough. Here’s one example why:
Let’s say your name is Roger and your business partner’s name is Emory. Emory is in his mid 60s, seems fit, but then he has a debilitating stroke. His marvelous fourth wife Carol, age 23, strides up to you shortly thereafter in a tight mini-skirt and says, “Roger, I’ve got Emory’s power of attorney. Where’s yours?” You’re dumbfounded. And, you’ve got a problem. Carol’s your new partner. She’d be happy to sell her stake to you, her interests go well beyond the petty concerns of running a business, but you don’t have the funds available to buy her out. Now what?
Next post: another example.