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Question 31 of 61 in Basics |
What about buy-sell agreements for corporations? |
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The death of a shareholder of a closely held corporation does not terminate the corporate, but it may have serious consequences concerning the continuation of the business, the disposition of the deceased shareholder’s stock (including the possibility of unwanted heirs or outsiders acquiring the stock and becoming involved in the business).
Again, the solution is a properly designed and executed buy-sell agreement. The agreement should reflect the goals of the people making the agreement clearly and in great detail. Some agreements require the other shareholders to purchase the stock of the deceased shareholder at the time of death. Another type of agreement has the corporation buying and “redeeming” (holding as treasury shares) the shares of the deceased shareholder. |
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