When a partner dies, the partnership is automatically dissolved by law. In the absence of an express agreement, the surviving partners face the following alternatives:

1. Liquidation
◦ A forced sale attracts bargain-hunters, with assets sold at sacrifice prices
◦ With "goodwill" gone, value of the business is drastically reduced (40% to 90%)
◦ Surviving partners are out of a job

2. Reorganization
◦ Surviving partners may seek a new partner
◦ Finding a purchaser with enough skill, money, compatibility or professional designation may be difficult
◦ Convincing the heirs to sell for an agreeable price in time to prevent forced liquidation by creditors may be impossible

3. Borrowing
◦ The cost of borrowing to buy out a deceased partner's shares may be extremely costly
◦ Satisfactory credit arrangements may be difficult

There is a better solution

Partners agree by contract (a Buy-Sell Agreement) that:
◦ The interest of any deceased or disabled partner will be purchased by and sold to surviving partners in the event of death or disability
◦ The value of respective interests, or a method of determining them, will be clearly set forth
◦ The method of financing the purchase be clearly defined

Business life and disability insurance create the funds to finance transfer of business interest thereby:
◦ Providing sufficient cash immediately and economically
◦ Freeing operating capital for normal business requirements
◦ Eliminating additional borrowing or invading of personal resources

ADVANTAGES OF BUSINESS LIFE AND DISABILITY INSURANCE

To surviving partners – Guarantees full ownership of the business

To the heirs – Guarantees full value of their interest in the business in cash

To the business today – Guarantees business continuity and strengthens its position with customers, creditors and competitors

When a partner dies, good faith isn't enough.

Your partnership must liquidate or reorganize.

Today the choice is yours. Which will it be?

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Should we have Buy-Sell Insurance

Shouldtheagreementbefundedwithlifeinsurance