Provided by: Jennifer Kirschenbaum, Esq.
May 24, 2018
My partners and I want to secure our buy-outs with insurance. We have the insurance, but not sure how it works once the insurance is in place. Do we need a contract?
Yes. Getting the insurance is step 1. Step 2 is making sure the structure is in place so the insurance gets applied as you would like. When you began each policy you indicated a beneficiary - for which you may have selected your practice or the surviving partners or the deceased partner's spouse, and in each case the insurance is marked for a specific purpose. In order for that purpose to be secured, a contract must be signed between the parties dictating the specific purpose and process to achieve it. That document's name will vary depending on the set up of the operations. In the case of a Corporation, the document is a Shareholder or Stock Purchase Agreement, with a Company, the document is an Operating Agreement, with a Partnership, the document is a Partnership Agreement. And, regardless of the corporate form, calling it a buy-out or buy-sell is completely appropriate.
A buy-sell is specific for your practice and needs to be customized. Happy to help.