The Most Overlooked Part of Your Buy–Sell Agreement
A buy–sell agreement is one of the most important documents a Canadian business owner can have. It outlines what happens to ownership if a partner dies, becomes disabled, or chooses to exit. But even when the agreement is in place, one critical element is often missing: funding. Without proper funding, the agreement may look complete on paper but fail in real life.
Many Canadian lawyers point out that buy–sell agreements commonly include the “Three D’s”: death, disability, and disagreement. The first two — death and disability — create financial consequences that typically require immediate liquidity. That’s where insurance becomes essential. Life insurance funds the buyout in the event of death, while disability insurance or critical illness insurance can help fund a buyout or cover expenses if an owner can no longer work.
Tip of the Week:
Review your buy–sell agreement AND how it’s funded. A buy–sell without insurance is simply a wish — not a plan. Ensuring the agreement is fully funded gives your business, your partners, and your family financial certainty.
