Will Sanchez was living the good life before 2018. He and his Dentist partner owned a local horse-boarding ranch. They were approaching two decades of laboring together when the Dentist passed away unexpectedly, leaving him without a partner.
Unable to keep the business going, Will settles the estate through a lengthy and protracted court battle. Mr. Sanchez was forced to declare bankruptcy due to his failing business and mounting legal fees. Losing the business, horses, facilities, and the ranch he had dreamed of since he was a little boy was devastating.
He is nearing 82 years of age; instead of enjoying a well-earned retirement after a lifetime of work, he is experiencing severe financial challenges and had to return to driving trucks to supplement his income.
This tale is a tragedy because, with some proactive planning, the bankruptcy could have been avoided. If Bob had a life insurance policy that funded a Buy-Sell Agreement, he would have been able to keep his ranch.
QUESTION: What is a Buy-Sell Agreement?
A Buy-Sell Agreement is a contract between company owners in which each owner agrees that upon separation from the business or death, their shares will be sold to the remaining owner at a set price and that each owner commits to buying the shares of their departing co-owner.
A buy-sell agreement often uses life insurance policies to fund the potential buyout in case of a partner’s death.