Buy-Sell Agreement Funding – Secure Your Business with Proper Funding
Clarity for Co-Owners
A buy-sell agreement is a legally binding plan between business owners that dictates what happens if an
owner dies, becomes disabled, retires, divorces, or exits. It prevents disputes, keeps control with the right
people, and provides a clear price or formula for the transfer of shares. Without one, a partner’s heirs could
become decision-makers overnight, or you could be stuck in limbo just when clients need stability. Realegacy Partners builds these plans around expertise, excellence, transparency, and trust—so your company can keep operating without interruption.
Life & Disability Insurance Create Instant Liquidity
Paper plans don’t pay buyouts—cash does. Funding a buy-sell with life insurance (and disability buy-out coverage) delivers the money exactly when it’s needed. In a
cross-purchase design, each owner carries a policy on the other; in an entity-purchase design, the company owns policies on all owners and redeems shares at the agreed value. Realegacy Partners coordinates funding to the agreement language, so the payout aligns with your attorney’s drafting and your CPA’s tax guidance.
Price It Right—and Keep It Current
Your coverage should match your business value. Some agreements set a fixed price updated annually; others use a formula (such as a multiple of earnings). If your shop near Loop 289 grows from $1M to $1.6M, the coverage on each 50/50 partner should rise from $500k to $800k. We review values regularly so the insurance remains adequate as revenue expands from Shallowater to Slaton.
Don’t Overlook Long-Term Incapacity
A partner who can’t work for a year may still own half the business. Disability buy-out insurance provides a lump sum after a defined disability period, allowing a fair purchase of their interest without draining company cash or bank lines. We align disability terms with your agreement’s trigger definitions and timelines.
FAQs About Buy-Sell Agreements
Straight Answers for Busy Owners
Do small two-owner firms really need this?
Yes—clarity with a grieving spouse or estate prevents conflict and preserves value.
Who should own the policies?
Two owners often use cross-purchase; multiple owners may prefer entity-owned for simplicity.
What if the value changes?
Build in a valuation method and review coverage each year.
Is insurance the only funding method?
Alternatives exist (sinking funds, loans, installments) but are slower and uncertain.
Term or permanent coverage?
Term may suit early years; permanent can support long horizons or rising values—we often blend both.
Protect Your Partnership and Your Legacy
A funded buy-sell agreement keeps the business you built on track no matter what life brings. Realegacy Partners delivers a coordinated, transparent process with your legal and tax advisors.