Buy-Sell Agreements represents over 30 years of work and study of buy-sell agreements for closely-held or family businesses of all shapes and sizes. I’ve drafted or edited hundreds of buy-sell agreements and reviewed over a 1000 more. In my opinion, it’s the hardest agreement to draft and get right. Buy-Sell Agreements will define what I mean by a buy-sell agreement, identify the three types of buy-sell agreements, describe what I mean by a “triggering event,” describe the tax consequences of a buyout and much, much more!

Buy-Sell Agreements truly is a labor of love. My family was negatively impacted by a poorly drafted buy-sell agreement, and I possess incredible passion around this subject to hopefully prevent my readers from suffering needlessly from a poor buyout provision. It’s truly the first book of its kind written for the lay audience to explore the depths of buy-sell agreements as deeply as I go in this book.

Buy-Sell Agreements is chock-full of examples of real-world buy-sell situations so that it hopefully is easy to follow along. I wrote this book for you!!!

Won’t you join me on an exploration of buy-sell agreements?

Praise for Buy-Sell Agreements

I have long said that one of the most difficult tasks of estate planning council is to impress the client with the significance and urgency of action.   In no case is that statement truer than with a business with multiple owners. There are times a third-party influencer – such as a nationally known expert author – can help.

Getting out of a business and getting the most out of the business at the same time is no easy trick. I can state with certainty and experience that the harmonious transition from one set of business owners to another is both difficult and uncertain and that the process is fraught with impediments both expected and unanticipated.  Paul’s book, written from a “standing over your shoulder” point of view, can be the impetus for client action.  A carefully considered buy-sell agreement is like a parachute; the time to strap one on is before you need it and while you are still on the ground.
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Paul’s book minces no words about the costs of a buy-sell and directly addresses the downsides and alternatives. It provides the reader with a thorough discussion of the various types of buy-sell agreements – and the legal devices, tools, and techniques that can augment or complement the buy-sell.  I particularly liked Paul’s chapter on Restriction, Transfers, Rights, and Options.   Covering all contingencies is essential.  Yet all too often, a right of first refusal, right of first offer, right of last look, tag along put option rights, drag along call option rights, “Russian roulette” “Texas shoot out”, or “Dutch Auction” solutions are not even considered.

The book does a particularly good job with describing both commonly inserted and often unfortunately omitted provisions regarding buy-sell triggering events.  Death and voluntary withdrawals, retirement and lifetime sales are obvious provisions.  But long-term disability, divorce, involuntary terminations (with or without cause), improper sharing of confidential information or competition, malfeasance or defalcation, bankruptcy or experience of foreclosure, loss of professional license, attempts to encumber interests or transfers in contravention of the agreement, attempts to terminate S status are among the other often overlooked provisions that the book covers.

Paul discusses the most essential funding tools for Buy-Sells, life and disability insurance, as well as installment arrangements in much more detail than many other resources.  He covers the problems of each as well as the “fixes” to those problems.  For example, in his discussion of installment sales provisions in a buy-sell, there are extensive comments on interest, security pledges, personal guarantees, acceleration of promissory notes, loan restrictions, releases, and claw-back provisions.

Since Paul has written extensively on valuation, his chapter on valuations is exceptionally helpful to both clients and professionals, particularly in getting clients to be realistic about the value of his/her/their interest.  The book covers the pros and cons of the set (Schedule A) method, the formula method, the appraisal method, and various hybrids.  It goes into detail on the selection of an appraiser or appraisers and the make-or-break issues of the “as of” date, the standard of value, the premise of value, the level of value, and a special valuation provision for situations where there is a deadlock on important issues.

There is an entire chapter for the lay reader on “Common Errors in Buy-Sell agreements and yet another on the same topic specifically for professionals. Sadly, there are many items covered and all too many of them are often found in agreements drafted by inexperienced, slovenly, or unprofessional draftspersons.  So the following chapter, Working With Professional Advisors, is well placed and is a no-nonsense guide to evaluating and selecting professional advisors (and a great guideline for who you should be).  The questions clients should be asking you are there and hopefully, even before you read this chapter, you’ll have the answers.
The book ends with a very useful 9-page Buy-Sell Agreement Review Checklist and yet another checklist for other complementary documents.

BOTTOM LINE:
BUY-SELL AGREEMENTS should be both a tool you use to help selected clients understand the importance of a buy-sell and the urgency of implementing and fully funding one and a first line quality control resource for you, the professional.  For the just starting in practice professional, this is a terrific resource. In fact, practitioners should consider buying this book to give to clients who own business interests.

 

– Steve Leimberg is Publisher of LISI. He is co-author with Howard Zaritsky of the treatise TAX PLANNING WITH LIFE INSURANCE: ANALYSIS AND FORMS 2ND EDITION.   He is also the creator, with Dr. Robert T. LeClair, and Vincent Lackner, of NumberCruncher Estate and Financial Planning Software.

In the course of a single year, estate planning has been directly affected by numerous, significant revisions to the law. When rules change, every estate planner must stay completely up-to-date with all the opportunities—and pitfalls—arising from the new legislation.
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The Tools & Techniques of Estate Planning, 19th edition, applies the trusted Tools & Techniques approach to all aspects of modern estate planning, enabling you to:

  • Help your clients plan every aspect of their estate, including tax, investment, insurance, and estate administration decisions
  • Help your clients effectively preserve their assets under current law
  • Handle a wide variety of estates and specific circumstances
  • Save significant amounts of time with exclusive estate planning tools

In addition to everything that made the first eighteen editions of The Tools & Techniques of Estate Planning so effective and popular, this new edition delivers several enhancements including:

  • Cover-to-cover updates to reflect changes in tax code that were enacted in the 2017 Tax Cuts and Jobs Act
  • A new chapter on planning techniques that utilize the new Section 199A Qualified Business Income (QBI) deduction
  • Significantly updated chapters on trust planning and income tax considerations in estate planning

This book features easy-to-understand, real-world examples from expert authors on what techniques are best suited for a wide variety of circumstances, and equally important advice on how to avoid future problems. Readers will learn the most important issues and planning techniques to help clients plan every aspect of their estate. In these pages you’ll also find reliable, practice-based analyses of hundreds of recent cases and rulings, helping you assist your clients in making the best decisions for themselves and for their families.

Historically low interest rates and higher income taxes have led to an increased interest in charitable planning. Today, many taxpayers are searching for new ways to maximize their deductions. In the current financial and tax environment, charitable giving is more valuable than ever.
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This book has been fully revised, expanded and enhanced to help you meet the needs of every client looking to make the most of their charitable giving.

The Tools & Techniques of Charitable Planning, 3rd Edition, includes:
• New tools to help planners deal with higher capital gain tax rates
• New chapter on Charitable Life Estates
• Techniques specifically geared toward organizing and strengthening the approaches used by planned giving teams within charitable organizations
• Tools for meeting the expectations of continuing growth in the value of assets often used to fund charitable gifts
• Exploration of recent trends toward using CRUTS rather than CRATS
• Insights into the best techniques to meet planned giving goals in a low-interest-rate environment, including the use of CLATs
• New content on Type III supporting organizations
• Expert tips on using charitable gift annuities in death

Comprehensive updates throughout the book will help you understand the new tax rules, including the effects of the Net Investment Income Tax on donors, beneficiaries, and trusts.

The tools and techniques in this book are practical and proven, compiled by a team of the foremost experts in the field. Numerous charts, graphs and tables are included, simplifying everything from the basic charitable deduction rules to the most complex charitable giving techniques.

The single-volume The Tools & Techniques of Charitable Planning, 3rd Edition, provides instant access to all of the vital information absolutely necessary for guiding each client through their important charitable planning decisions.

Select Articles & Additional Co-authored Works

Property or Financial Powers of Attorney

Autopsy of a Gift Gone Bad: Lessons Learned

How to Avoid Common Sources of Drafting Errors

Innovative Trust Designs Better Serve Inheritors

Defined Valuation  Clauses—From Theory to Implementation

Defined Value Gifts and Sales Under the Microscope: What’s Possible and What’s Not?

The Human Side of Estate Planning Part 3

The Human Side of Estate Planning: Part 2

The Human Side of Estate Planning: Part 1

Thirty-two Core Beliefs

Issues in Income Shifting

“Defined Valuation Clauses-From Theory to Implementation,” co-author with Renee Gabbard, Estate Planning (September 2019)

“Issues in Income Shifting: What’s Past is Prologue,” Trusts & Estates (September 2019)

“Autopsy of a Gift Gone Bad: Parts I and II,” 30 Planned Giving Today Nos. 1-2 (January and February 2019)

”The Human Side of Estate Planning,” Parts 1-3; Trusts & Estates (July, August, and October 2018)

“How to Avoid Common Sources of Drafting Errors,” Estate Planning (July 2018)

“Innovative Trust Designs Better Serve Inheritors,” co-author with Richard A. Oshins, Esq., 44 Estate Planning No. 6 (June 2017), pp. 3-11.

“32 Core Beliefs,” Trusts & Estates (May 2017), pp. 45-54.

 “Psychological Factors in Estate Planning,” co-author with John J. Guerin, Ph.D., Chapter 18, Financial Behavior: Players, Services, Products, and Markets (Oxford University Press 2017) 

“Anatomy of an LLC Operating Agreement: The Fundamentals for Valuation Analysts,” The Value Examiner (Sept./Oct. 2012, pp. 24-29).

“Estate of Gallagher: The Rest of the Story,” co-author with Timothy R. Lee, Valuation Strategies (Vol. 15, No. 3 Jan./Feb. 2012 pp. 4-13)

 “Gallagher Estate v. Commissioner Valuation Issues: a la Carte or Prix Fixe,” co-author with Timothy R. Lee, Business Valuation Alert (Vol. 12 Issue No. 4 Oct. 2011)

“Estate Planning for Couples: Should it Be a Solo or a Duet?” co-authored with Emily Bouchard, Forbes (April 10, 2020)

“Reviewing Business Appraisal Reports: The Devil is in the Details,” Tax Management Estates Gifts and Trusts Journal (August 2011)

“Must Synergistic Buyers be Considered in Fair Market Value Analysis?” Valuation Strategies Vol. 13, No. 6, pp. 28-33 (2010)

“Who Says Appraisers Agree on Everything? Ten Issues That Affect Valuations (Parts One and Two),” Valuation Strategies Vol. 11, No. 6, pp. and Vol. 12, No. 1, pp. 27-31 (2008)

“Hermeneutic for Evaluation, Selection and Design of Estate Planning Tools and Techniques,” Tax Management Estates, Gifts and Trusts Journal, pp. 155-175 (May 12, 2005)

“The Initial Estate Planning Interview,” 27 ACTEC Journal 297 (2002) 

“Defined Value Gifts: Does IRS Have it all Wrong?” 28 Estate Planning No. 12, pp. 582-591 (2001)

“Did the IRS Answer the Wrong Defined Value Gift Question?” Probate Practice Reporter (Part 1-Aug. 2001; Part 2-Sept. 2001).

“The Initial Estate Planning Client Interview,” 2 CCH Journal of Practical Estate Planning No. 4, pp. 32-41 (Aug./Sept. 2000),

“10% Remainder Interest Requirement Poses Sticky Drafting Problems,” Tax Management Estates, Gifts and Trusts Journal, Vol. 24, No. 3, pp. 146-150 (May-June 1999).

“It’s Not Easy to Draft a Testamentary Charitable Remainder Trust,” Charitable Gift Planning News (October 1998)

Editor, The Louisiana Estate Planner, Vol. 20- (p. 1041-); co-editor (with Gerald LeVan, Esq.), Vol. 17, No. 12 – Vol. 19, No. 12 (pp. 842-1040); special editor (with Gerald LeVan, Esq. and Carey J. Messina, Esq.), Vol. 17, No.3 – Vol. 17, No. 11 (pp. 770-841).

“Trust Anxiety: Revocable Trusts in Louisiana,” 39 La. Bar Journal 574 (1991)

“Legislature Puts Trap in State Tax ‘Cookie Jar,’” 38 La. Bar Journal 415 (1990)

“Fifth Circuit Symposium: Federal Taxation,” 35 Loyola Law Review 493 (1989)