Legal Question in Business Law in Texas
Buy out agreements
My wife's father passed away in 91 and was one of three partners in a business with his brothers. Their buy-out agreement said that the other partners could buy his interest at 1963 prices. Is that legal? If so, couldn't everyone let a family member buy their company for $1? She paid an extremely high amount of estate taxes (55%) after his death and, in essence, got a low six figures for a 1/3 share of a $200 million dollar plus (annual revenue)company. Wouldn't she have gotten a huge tax break or something at the very least? I really appreciate your help on this one.
1 Answer from Attorneys
Re: Buy out agreements
Buyout agreements don't have to be fair to be legal and enforceable. Everyone agreed to it, so it's a done deal, even if they agreed to a $1 buy-out.
The fact that your mother had to pay hefty estate taxes simply means that neither she nor your father did any estate planning. That could have substantially reduced the estate tax bite.
Unfortunately that can't be done after the fact.
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