First, a properly drafted buy-sell agreement should be drafted not just by an attorney, but an attorney that specializes in taxation.  At David Bindrup Law Firm, we are not just attorneys, but also Certified Public Accountants licensed in California and Nevada and have Master of Laws in Taxation.  So, incorporating federal income and federal estate tax planning into the agreement saves everyone time, money, and taxes.  

Second, the event that makes the buy-sell agreement actionable is the life event such as death, divorce, bankruptcy, retirement, or incapacity or disability.  

Third, the parties have already agreed in writing the terms and conditions of the buy-sell agreement which could be drafted as follows: 

• Redemption Agreement, which is where the company buys back the shares or membership interest. 
• Cross-purchase Agreement, which is where the owners agree to buy each other’s shares or membership interest.  
• In addition, the buy-sell agreement can be a hybrid of both agreements, which means it can incorporate both the redemption and the cross-purchase agreement.  However, in almost every single buy-sell agreement, there are almost always restrictions preventing outsiders from receiving shares or membership interest.  

Fourth, the parties then follow the agreement and proceed to receive the funds and make the partial distributions according to the agreement.  How and when distributions are received is extremely important along with the signing off on membership interest or stock shares.  

At David Bindrup Law Firm, our tax attorneys not only integrate your buy-sell agreement with your estate plan, but we structure the transaction tax efficiently to benefit the partnership.