Here is a test to determine if you need a buy-sell agreement.

If you own, but are not the sole owner of your business, a shareholder agreement is an absolute must. A shareholder agreement is almost as important as a will. Why? If you die or are disabled without one, you may impose serious financial consequences upon your spouse, children or other heirs. In the absence of a binding buy-sell agreement, the surviving shareholder(s) might be forced to carry on business with your spouse or children as fellow shareholders. The surviving shareholders would have to shoulder your workload and ask for larger salaries, while your family would have to survive on meagre dividends. This may not be your wish or the wish of your heirs.

If there is more than one shareholder of a private corporation, enter into a shareholder's agreement to deal with issues such as these: setting a policy regarding the reinvestment of annual earnings or dividend payments; the pay level of officers and directors; possible consequences if an owner/manager becomes disabled or dies; how to use life insurance to fund a buy-sell agreement.

Even if there is only one owner, a funded buy-sell agreement with an interested party, such as a senior employee, may be in everyone's best interest.