Most closely held companies have a buy-sell agreement drafted years ago and never funded. When an owner dies, the bank freezes the credit line, the surviving partners are obliged to buy shares they can't afford, and the personal guarantees land on a family that never signed up for them. Work out your number below — it takes about a minute.
Owners tend to think about one of these. It's rarely the expensive one, and they almost never arrive separately.
Your agreement obliges the surviving owners to buy your share. If it was never funded, they borrow at the worst possible moment — or your family ends up holding equity in a business it can't run and can't sell.
The relationships, the bids, the customers who only answered because it was you calling. That profit walks out with you and takes two to three years to rebuild, if it rebuilds.
Equipment notes, the credit line, the building. You signed personally, so the debt doesn't die with you — it passes to your estate, in the same week the bank pulls the line.
Pick the closest business type, then adjust. Nothing is sent anywhere — this runs entirely in your browser, and no one sees the result unless you choose to talk to me.
| Line | Amount |
|---|---|
| Buy-out obligation | $0 |
| Key person loss | $0 |
| Personal guarantees | $0 |
| Coverage already in place | $0 |
| Unfunded | $0 |
The money arrives from outside the balance sheet on the day it's needed. No borrowing, no forced sale, no equipment going out the gate to settle an estate.
Each owner insures the others, or the company insures everyone. Which one is right depends on how many owners you have and what your CPA says about basis — that's a conversation, not a form.
The business owns the policy on the person who drives revenue. Proceeds bridge the gap while you replace them, and lenders and sureties like seeing it on file.
Coverage sized to the debt you personally guaranteed, so it's cleared rather than inherited. This is usually the cheapest piece and the one nobody thinks of.
I'll look at your actual agreement and tell you whether it's funded. If it already is, I'll say so and leave you alone — I'd rather be the person you call in three years than waste your afternoon today.
Get my numbers — 15 min