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A large number of North American business enterprises are family-owned or controlled by family. Income produced by these family-run businesses generates more than 50% of the Gross National Product, according to Forbes. With many family-owned businesses extending to the fourth generation and beyond, it’s imperative that these entities have buy-sell agreements that are written by tax lawyers experienced with this process.
A buy-sell agreement between two or more family members who go into business together is a legally-binding agreement that governs a change in ownership in the event one or more of the owners dies, leaves the business, is forced to leave the business, is disabled, or retires.
A buy-sell agreement is intended to protect the ownership interests of the remaining partners during critical transitional periods. The agreement stipulates the amount the departing partner or the surviving family will be compensated, who will be allowed to buy his or her shares of the business, and the circumstances that will generate a buyout.
Whether your family-owned business is classified as a Partnership, LLC, or Corporation, Mendes Weed, LLP can help you plan for your business and prepare your buy-sell agreement that is customized for your business needs. .
While we like to believe that going into business together as a family will be an amicable decision, it is not uncommon for family members to have conflict with their buy-sell agreements, especially if they have properly prepared, discussed, and planned for potential issues and counseled by a tax attorney.
Mendes Weed, LLP can guide and counsel you through this process and hopefully alleviate some of your concerns.
For more information about buy-sell agreements in a family-owned business, your tax status as a result of a change in ownership, or tax representation in front of the IRS, please contact us.
Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.