How to Use Life Insurance When Buying or Selling a Small Business

When you own a business with partners, your equity agreement is only as strong as the capital backing it up. Most co-owned small businesses have a buy-sell agreement written by an attorney, stored in a filing cabinet, and completely ignored until tragedy strikes. If your business partner unexpectedly passes away tomorrow, their equity stake does not vanish. It transfers directly to their spouse or estate. Suddenly, you find yourself in business with a grieving family member who knows nothing about your operations, demands monthly cash distributions, or insists on selling their inherited equity to an outside competitor.