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What is a Buy-Sell Agreement?

What is a Buy-Sell Agreement?If you and a business partner are considering a joint venture, it is important to outline the parameters of that relationship, preferably in writing. This is what is known as a Buy-Sell Agreement. It is a written agreement among the owners of a company in which each owner agrees that upon the occurrence of a specified event, such as a death or the separation from the business, their shares will be sold to the surviving owner at a specified price and that each owner commits to buy the shares of their departing co-owner. Types of Buy-Sell Agreements There are three types of Buy-Sell Agreements. The first, the Cross Purchase Agreement, allows the remaining co-owner to purchase the interest of the departing owner. The second, the Entity or Redemption Agreement, requires the business itself to purchase the interest of the departing owner. The final type, the Hybrid Agreement, is a cross between the previous two agreements, requiring the remaining owners and business to purchase the interest of the departing owner. The remaining owner has the option to buy the departing owner’s interest. If he chooses not to, the business would be obligated to do so. Any business with multiple owners should have a buy-sell agreement in place. What is a Buy-Sell AgreementIf you have any questions about Estate Planning or Buy-Sell Agreements, please contact Steven Shane at 301.575.0313 or sshane@offitkurman.com. Mr. Shane’s knowledge of business and estate planning, combined with his tax background and good communication skills, provides a unique ability to relate to clients and communicate with them effectively about their concerns and objectives. He is also experienced in drafting documents for business planning     Offit Kurman Attorneys at Law: Estates, Trusts and Elder Law Practice Group Estate planning is one of the most fundamental and important legal services we offer. At Offit Kurman Attorneys at Law, the attorneys in our Estates, Trusts and Elder Law Practice Group are dedicated to the design, documentation, and implementation of high-quality estate plans. If you have any questions about Estate Planning or our blog, “What is a Buy-Sell Agreement?” please fill out the contact form found on OffitKurman.com to access the sound legal guidance that our experienced estate planning team   has to offer. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn. Sources: The Weekly Scenario from Steve Shane – 6.24.13