tax deductions for the scheduled payments. Te departing executives can continue to assist the business with their managerial input, enjoy a steady cash inflow, and avoid a big tax bill for a large sum received in a single year.


Start Early


Family businesses should draw up and sign buy-sell agreements long before a trigger event occurs. “It’s much easier to hash out all of the ‘what ifs’ when everybody's healthy, in good spirits, and the business is going well,” says Brownell. “You do not want to suddenly try to figure out who owns what part of the business, how people will be compensated, and how the business will be valued, the morning after a material event occurs.”


Quiz: How Good is Your Buy-Sell Agreement?


Will your buy-sell agreement protect your family business from disaster? Find out by taking this quiz. Score 10 points for each “yes” answer. Ten total your score and check your rating at the bottom of the chart. Does your buy-sell agreement do each of the following?


1. Describe the disposition of corporate stock upon death, divorce, disability, or personal bankruptcy?


2. Establish procedures for the assessment of cognitive decline?


3. Specify the recapture of stock from terminated family members?


4. Designate conditions for the buyback of passive shareholder stock?


5. Enumerate funding sources for stock buybacks?


6. Establish trusts as needed? 7. Ensure the conformance of personal wills with the buy-sell agreement’s terms?


8. Schedule annual reviews of the buy-sell agreement?


9. Require an annual business valuation?


10.Ensure that all family members have bought into the agreement and its business valuation formula?


What’s your score? 80 or more: Congratulations. You have gone a long way toward preserving your family business. Between 60 and 80: It’s time to fine tune your buy-sell agreement. Below 60: Your business is at risk. Take action on the suggestions in the accompanying story.


Phillip M. Perry is an award-winning business journalist with over 20 years of experience under his belt. A three-time recipient of the American Bar Association's "Edge Awar for editorial achievement, Perry freelances out of his New York City office. His byline has appeared over 3,000 times in the nation’s business press, and he maintains a web site at www.editorialcalendar.net.


ward" TPI Turf News November/December 2022 121


Such timeliness is especially important when it comes to business valuation, says Harms. “It's remarkable how reasonable people can be about valuation when they don't know if they'll be the buyer or the seller of stock at a certain price.”


Allocating company stock, valuing shares, and wrestling with family personalities may seem like formidable tasks. But the result can be a carefully crafted buy-sell agreement that not only saves the business from the crippling costs of a financial crisis, but also keeps the family functioning as a unit when something bad happens.


And a cooperative family effort is critical to success. “Buy-sell agreements need to make sense for all the parties involved, or people will refuse to abide by them,” says Spore. “And that means the business may end up with the very problem it wanted to avoid in the first place—litigation. Tat’s expensive, difficult and painful for everyone.”


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140