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What role will the retired founder take in retirement? What role will the founder's spouse take if the founder were to die before retirement and transfer of the business? If two or more family members are going to work the business, what respective roles will each assume? Who decides?

It is not the agent's role to answer these essential questions for the client. However, by raising them for discussion the agent can help the client answer them and, more importantly, work towards a planned solution.

Buy-Sell Plans Help Answer Participation Questions

"Who" and "What Role" questions are easily resolved with a carefully drawn buy-sell agreement. As important as they are with any business succession plan, buy-sell agreements are especially critical when it involves family members.

  • By identifying the buyer(s), the buy-sell agreement effectively answers the "who" questions.

  • By laying out the seller's terms of sale, the agreement forms the basis of defining the founder's role in the business after it has been transferred to the new owner (which might well be at the founder's retirement).

  • By defining the respective share of the business each buyer will receive (if more than one family member is involved), the agreement effectively decides what position each active child will take in the business. It can also settle any questions about the spouse's involvement in the business.

It is outside the scope of this course to present a detailed discussion of buy-sell arrangements. Estate planning advisers are assumed to possess an understanding this topic and the basics of business insurance planning in general. For more information on business insurance topics, advisers can refer to any of Ohio National's many business insurance forms, notably the Buy-Sell Planning Adviser Guide (Form 2412), the Buy-Sell Funding Guide (2412), and ON-Trac II, Business Insurance, Unit XX, located online in ON-Net University.

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