What type of agreement is a contract binding the owner of a business interest to sell the business interest for a specified or determined price at his or her death or disability?

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Buy-sell agreements are contracts binding the owner of a business interest to sell the business interest for a specified or determined price at his or her death or disability. If a fixed price is used in the buy-sell agreement, the IRS will take a long look at it. Planners should suggest the client use a formula that allows for the business value to increase or decrease as time passes. If a formula is not appealing, then an appraisal for the business at the time of the decedent's death will help avoid the IRS's scrutinizing the value of the agreement.

What Type of Agreement Is a Contract Binding the Owner