• http://www.ontargetcoach.com/ Brent Pittman

    That is interesting about buying the business partners shares? I was under the impression that his heirs would inherit the business or do you have it set up that the partner has 1st dibs over the family?

    • Michaellewis

      While I am not an attorney and avoid giving legal advice, the disposition of ownership interest would depend upon the written agreement between the owners, commonly referred to as “a buy-sell” agreement that can be triggered at the death of one of the owners. If there is no agreement, the property would be handled as an asset of the deceased’s estate.
      Funding of the purchase price is separate from the agreement itself. You can own an insurance policy on another person provided you have an “insurable interest”. Essentially, this means you can own a policy if the person’s death would have a negative financial impact upon you. Of course, the person being insured must agree to your ownership.
      If you find yourself in this position as a partial owner of a business, it’s probably time to see a local corporate attorney who can guide you in making proper decisions.

      • http://www.ontargetcoach.com/ Brent Pittman

        Michael, thanks for clearing that up. Never hard of buy/sell agreement, I can that would come in handy, along with insurance.

  • http://www.moneylicious.org/ Ornella @ Moneylicious

    This was a fantastic write up. I especially like point #5. Newly business partner can easily overlook this key point. Thoroughly enjoyed it.

    • Michaellewis

      Thank you. A funded buy-sell agreement should be a part of every business ownership arrangement. While I’ve never had a partner die, it’s been a comfort knowing that the business could go forward without major disruption.

  • http://thechicagofinancialplanner.com/ Roger Wohlner

    Great post. You are right in the life insurance often gets a bad rap. In fact life insurance is a key element in the financial planning of most of my clients. The issue becomes (as you also state) how it is purchased. The amount and type of life insurance that is right for a particular situation should ideally be determined in the context of one’s overall financial plan.

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