In the last video, we talked about what a buy-sell agreement is, but how do you actually ensure that agreement can happen in reality? How do you fund a buy-sell agreement? Well, you have a few options:
- Use CASH
- BORROW money
- Use INSURANCE
Using insurance is the most cost effective way to fund a buy-sell agreement. You can structure it so that different policies pay out in different scenarios (death, disability, a critical illness, etc). and you can use your company’s dollars to pay the premiums.
If you have a buy-sell agreement in place, don’t make the very common mistake of forgetting to plan the most important part, how you’re actually going to fund the agreement!