Lawyers Advise Business Owners to Create Buy-Sell Agreements

The New York Times 0 month ago

NEW YORK — When business partners start a company together, they may not want to think about what could happen to their enterprise if one of them dies or gets divorced. Attorneys and accountants advise their clients to be prudent and create a buy-sell agreement that will help to ensure that a stake in the business doesn't fall into unwelcome hands.

Buy-sell agreements typically stipulate how a company will be valued and how an owner's stake will be handled in the event of death, divorce and also bankruptcy or disability.

If there's no buy-sell agreement and one of the owners dies, their stake can pass to their heirs — and the remaining original owner or owners may get one or more new partners they didn't bargain for.

In the event of a divorce, without a buy-sell agreement an estranged spouse could claim a portion of an owner's stake. But a well-drafted agreement can prevent this by requiring a spouse to sell any stake received in a divorce settlement. In many cases, either the divorcing owner will have to buy out their spouse, or the business partners will have to do so.

When an owner divorces, a buy-sell agreement may need to be approved by the judge handling the case. Judges can disregard agreements if it appears they grossly undervalued a company or were otherwise unfair to an estranged spouse.

In such cases, rather than have a company sold or shut down, a judge may order a divorcing spouse to compensate their soon-to-be-ex with cash or other property.

_____

Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: https://apnews.com


Source link
Read also:
ABC News › Finance › 0 month ago
Attorneys and accountants advise business co-owners to be prudent and create buy-sell agreements
Reuters › Finance › 1 month ago
WeWork is halting all new lease agreements with property owners as the U.S. office-sharing startup looks to curtail costs, the Financial Times reported on Thursday citing people briefed on the matter.
Sputnik International › 1 week ago
New Delhi (Sputnik): Days after police and lawyers clashed at a local court in India’s national capital, leaving two lawyers with bullet injuries and a high-ranked woman police officer allegedly harassed, women lawyers say life is not business as...
The Guardian › Technology › 2 months ago
Former president also said TV should be avoided: ‘Those are two things I’d advise, if you’re a good president, not to do’Barack Obama appeared to take a swipe at Donald Trump on Wednesday, saying he would “advise, if you’re president” to...
The Guardian › Politics › 1 month ago
Documents raise questions over whether former minister broke parliamentary rulesA former cabinet minister is facing questions over his conduct after documents revealed that he helped lobby for two firms he was paid to advise.Owen Paterson, a former...
The Guardian › Finance › 1 month ago
Insurer to compensate 35,000 customers after failing to advise them to shop aroundPrudential has been fined nearly £24m for “serious breaches” after failing to advise customers they may get a better deal if they shopped around for annuities and...
Business Insider › 0 month ago
Women business owners in the US aren't getting nearly as much funding as their male counterparts. That's one of the reasons Create & Cultivate hosted CEOs, founders, entrepreneurs, side-hustlers, and aspiring business owners at its first Small Business...
Forbes › 1 month ago
It’s not surprising that small business owners want to get in on the ground floor of AI, but they should be cautious about the solutions they adopt.
ABC News › 3 weeks ago
The owners of Louis Vuitton and Dior offered to buy the jewelry makers in cash.
Reuters › 1 month ago
Democrat Joe Biden would seek to make gun manufacturers more accountable for mass killings and ban assault rifles but would not force owners to sell their existing high-power weapons to the government, under gun control policy his presidential campaign...
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google
OR